Yes, you can gift your house to your son and still live in it, but it's complex, often involving a formal agreement for rent or a trust (like a Qualified Personal Residence Trust) to avoid serious tax issues (like Inheritance Tax or Capital Gains Tax) and potential loss of the home, as simply gifting it can mean losing control or triggering immediate taxes, so professional legal and financial advice is essential.
The simplest way to give your house to your children is to leave it to them in your will. As long as the total amount of your estate is under $15 million (per individual, in 2026), your estate will not pay estate taxes.
Do I pay tax if I gift someone money or an asset, like a house? If you gift money to a friend or family member there are no tax implications for you or the receiver. If you gift someone an asset like a house, we consider that transaction to be the same as you selling the house, and capital gains tax (CGT) will apply.
Generally, the most efficient way for the transfer to happen is at death via a trust. The deed is titled within your family trust or transfer on death deed. The trust transfers the assets to the children at passing. Skips probate.
Considerations when gifting a property
Even though no money is being exchanged for the property, there will be fees associated with engaging a valuer and legal professionals, and these fees can be included in the CGT cost base of the property, which will reduce the amount of the taxable capital gain.
Trusts and charitable donations can offer tax-efficient ways to pass on wealth and, in some cases, reduce the IHT rate. Gifting property, shares, or investments can be effective but may trigger Capital Gains Tax and require expert planning.
There are three main ways to transfer family real estate to heirs after you die:
The sale of your principle private residence is exempt from capital gains tax as long as you have lived in the house for the entire period that you have owned it and it was used as your only or main residence during your entire period of ownership.
When you gift your property you are still charged stamp duty, even if you sell the property for a small amount to a family member or friend. As the ATO states, the property is calculated at market value if you: Receive no money for your property.
You can give any amount of cash to a family member without worrying about a gift tax. However, if you're gifting to a minor child, any income earned from that gift may be attributed back to you for tax purposes.
There is no specific dollar limit for tax-free gifts in Australia. Personal gifts such as money given between family and friends are generally tax-free, but gifts involving assets may have tax consequences like CGT. Also, gifting large sums might affect government benefits or require reporting.
For a gift to be treated as a genuine gift, you must leave your home forever (as if you had sold it) or pay market rent (in which case your child will have to pay income tax on the rent they receive). For many families, the gift is less appealing when you take the tax consequences into account.
Set up a trust
One of the easiest ways to shield your assets is to pass them to your child through a trust. The trust can be created today if you want to give money to your child now, or it can be created in your will and go into effect after you are gone.
Using Trusts to Protect and Control Assets
Trusts are one of the most effective tools for passing down wealth with structure and intention. They allow you to control how and when your children receive assets while keeping the inheritance out of probate court.
The Six-Month Rule
For this exemption to apply, two conditions must be met. First, the property must have been your primary residence for at least three months within the 12 months before selling it. Secondly, you must not have used the property to make assessable income in any way within the 12 months before selling.
You can choose from two main methods to price a home sale to a family member: make a gift of equity or sell the home at fair market value. If both parties aren't careful, a gift of equity can result in significant gift tax implications.
You'll need to add half of your profit to your income for the year. Because your profit was $100,000, you'll report $50,000 as a taxable capital gain. Your personal tax rate is then applied to the total amount of income you reported to determine how much tax you owe.
In simple terms: you can sell or restructure business assets without paying CGT immediately. The tax is postponed until you eventually sell the new asset or another “CGT event” happens, like stopping business use.
If you meet the eligibility conditions, you can claim a full main residence exemption and don't pay tax on any capital gain when a CGT event happens (for example, you sell it) and you ignore any capital loss. If you don't meet all these conditions, you may still be entitled to a partial main residence exemption.
An easy and impactful way to reduce your capital gains taxes is to use tax-advantaged accounts. Retirement accounts such as 401(k) plans, and individual retirement accounts offer tax-deferred investment. You don't pay income or capital gains taxes on assets while they remain in the account.
Here's a quick breakdown of the typical expenses: Change of Ownership Fee: This is capped at R330, as gazetted in May 2023. Roadworthy Certificate: Expect to pay between R500 and R800 per vehicle at a roadworthy inspection centre. Vehicle Licence Fees: These vary by province and car type, ranging from R500 to R1 500.
A Gift Deed is a legal document drafted with the assistance of a lawyer to formally transfer ownership of property such as real estate, cash or another asset. The gift is made without expectation of payment or reimbursement now or in the future.
The most common way to transfer property is through a general warranty deed (sometimes called a "grant deed"). A general warranty deed guarantees good title from the beginning of time. A special warranty deed only guarantees good title during the seller's time of ownership.
Depending on your state, this may look like a grant deed, a gift deed, or other applicable property transfer documents. The deed and change in ownership form are then filed with your local county recorder's office.
Leaving Money as an Inheritance
Opting to leave an inheritance provides complete control over your assets until the end of your life. This allows you to dictate the terms of their distribution through tools like wills and trusts. This ensures that your financial needs remain covered and simplifies estate management.