How is stamp duty assessed on inherited property?
I am leaving my house to my children in my will. When I die, will they have to pay stamp duty on their inheritance? If so, how would government work out what that is?
Auntie’s answer: Finally, I am able to tell someone that the government will not take a fee for something. Yes, that’s what I said. If the property is willed to a family member, there is no stamp duty assessed.
Or if you want the more official version offered by Lands and Survey on the section of its website dealing with stamp duty rates: “No stamp duty is payable on transactions that are effected as a result of the death of a proprietor of a land, where the land is being inherited either directly, or otherwise dealt with by way of the administrator of the estate.”
One other point: the Lands and Survey website also says that if you choose to give away the property while you are still alive, the stamp duty will be a fixed $50. This is assessed when the transaction is considered to be “for natural love and affection between parent and child, husband and wife, brothers and sisters, grandparents and grandchildren”.
In addition, according to the department, “Property may pass between extended family members in a single transaction providing that evidence of the relationship chain can be shown and the parties are living. The stamp duty fee shall apply separately to each ‘link’ in the relationship chain.”
Category: Ask Auntie, Real Estate Questions
What does “The stamp duty fee shall apply separately to each ‘link’ in the relationship chain” mean? Does this mean if your uncle wants to give you his property, you have to prove he is your fathers brother and then each person (Uncle, Father & You) has to split the stamp duty?
What if a step dad or mother wants to give or will a property to a step child that has not been legally adopted?
There’s no stamp duty, just a registration fee (50 or so)
Speaking from experience, if 2 siblings inherit a house and 1 sibling decides to buy the other sibling’s interest because 1 wants the house and 1 wants the money, the sibling buying the interest does indeed get charged stamp duty on the value of the property, not just the 50% that they are paying to buy the sibling out. So govt still gets their fees! You can say that the property was transferred for love and affection, but that would be incorrect and dishonest if you did indeed execute a transaction. And if the bank is involved in funding the buyout, they won’t let you make the transfer for love and affection for fear that the other sibling could have a claim on the property in the future.
What? I think you just confused the issue. If 2 siblings inherited the house, on that transaction there is no stamp duty assessed.
If one sibling chose to give the other sibling their share of the property, that is not a dutiable transaction, you could do that transaction with the $50 administration fee as the L&S department would then be removing one siblings name from the property.
However, because one sibling chose to purchase the other sibling’s share of the house, this is essentially a sale and dutiable, this is not considered a transfer for love and affection.
Don’t understand your statement about the bank being involved and transfer for love and affection.
When the bank is involved, it is considered a sale (irrespective if you are siblings).
If you are borrowing money to “buy out” your sibling, from the bank’s perspective this is no different than someone buying a house from a realtor. The bank have to ensure that you are sole owner on the property so they can put a lien on it. How does transfer for love and affection come into that transaction?
Calm down, they were simply trying to point out that unless you are the sole inheritor someone will most likely be buying someone out (siblings don’t usually move in with each other, after all) and when that buyout takes place the govt will get their stamp duty on 100% of the value of the property, not the 50% that was paid. Would be very nice if there was a carve out to allow for this.
That is the norm. Doesn’t only apply to transfer of property that originated from love and affection. Otherwise a seller could collude with a buyer and claim they are selling their house for way less than it is valued while the buyer pays them money under the table and avoid paying duty on the full value.
Shame. Free transmission of capital allows the wealthy to exploit the poor.
This only applies to the transfer “for natural love and affection between parent and child, husband and wife, brothers and sisters, grandparents and grandchildren”. How is this the rich exploiting the poor?