There is often some confusion about how much stamp duty has to be paid when a person buys a property from someone that they’re related to. Here, I’ll explain how stamp duty generally works when buying or transferring property from a related party.
Stamp duty is rarely waived or reduced. When it comes to related parties, one of the only situations in which someone won’t have to pay stamp duty is when they are being added to the Title of their partner’s property.
Even then, the property must be their ordinary place of residence, the partner must be the sole owner of the property, and the couple must (as a result of the transfer) own the property as joint tenants or tenants in common with equal shares. They must be married or be de facto partners of at least two years.
In almost all other cases, buyers or transferees must pay the normal amount of stamp duty. Situations where the normal amount of stamp duty must be paid include:
Adding a spouse to the Title of an investment property. Since it’s not the ordinary place of residence, normal stamp duty must be paid. The amount payable will depend on the spouse’s share of the property. To determine the amount of stamp duty payable, a valuation must be carried out by an independent valuer (for properties up to $2 million) or by the Office of State Revenue.
Buying from a family member. The regular amount of stamp duty must be paid when buying property, even when from a family member. Some family farm transactions, however, are exempt from stamp duty.
Gifting a property to a family member. If you receive a property from a family member as a gift, you must still pay the normal amount of stamp duty. (However, if the previous owner has died and the property is left to you, generally only a nominal duty of $20 applies.)
For full details on stamp duty in WA, see the Duties Act 2008.
Image by Yoni Lerner via Flickr.