Yes, you can legally sell your house to your son for $1 in Australia, but for tax and duty purposes, the transaction is treated as though it occurred at market value, not the discounted price. This is due to "arm's length" transaction rules enforced by the Australian Taxation Office (ATO) and state revenue offices.
If you sell, transfer or gift property to family or friends for less than it is worth, you'll be treated as if you received the market value of the property for capital gains tax (CGT) purposes.
Gifting your house to your son is legally possible but triggers stamp duty and possibly CGT, requires proper conveyancing and mortgage consent, and can have significant effects on government benefits, family law and future asset protection.
If you're considering giving cash, you might want to think about gifting appreciated stock instead. This approach could significantly reduce—or even eliminate—the federal tax on the asset's growth. This strategy revolves around leveraging the different long-term capital gains tax rates.
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.
The annual gift tax exclusion of $19,000 for 2026 is the amount of money that you can give as a gift to one person, in any given year, without having to pay any gift tax. This limit rose from $18,000 in 2024 to $19,000 in 2025, where it will remain in 2026.
Leave your home in your will
The most common way to pass your home to your heirs is through a will—a legal document that sets forth your wishes for what should happen to your property and belongings when you die.
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.
A common way to defer or 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.
Also, the Income Tax Act does state that capital gains arise when an individual transfers a capital asset. However, Section 47 of the Act states that this provision excludes 'gifts' from the definition of 'transfer'. Thus, even as per the Income Tax Act, the sender of a gift can enjoy tax exemptions.
Adding a child to your property title means you are transferring part ownership of your home to them. You may choose to make them a joint tenant (with equal rights to the whole property) or a tenant in common (owning a specific share). Once the title is transferred, your child becomes a legal owner of the property.
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.
The ATO makes it clear that recipients don't have to pay tax on cash gifts, no matter how large they are — so long as you can prove it's indeed a gift.
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.
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.
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.
You're eligible for the exclusion if you have owned and used your home as your main home for a period aggregating at least two years out of the five years prior to its date of sale. You can meet the ownership and use tests during different 2-year periods.
The simplest way to avoid capital gains tax is to regularly use your capital gains tax allowance (officially known as your annual exempt amount or AEA). How easy this is to do depends on the assets you are selling.
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.
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.
The 7 year rule
No tax is due on any gifts you give if you live for 7 years after giving them - unless the gift is part of a trust. This is known as the 7 year rule.
Avoid Inheritance Tax by Using insurance to pay inheritance
Instead, it will be used to pay the outstanding Inheritance Tax bill on their other inheritances. This will allow you to avoid inheritance tax or reduce the amount you will have to pay.
You can redirect your inheritance to anyone you want. It does not matter if the deceased left a Will or if you inherited under the intestacy rules (i.e. where there is no Will). You may wish to redirect your inheritance to: reduce the amount of inheritance tax or capital gains tax due in the deceased's estate.
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.
What do I need to know about tax when I make a gift? In reality, you can gift as much as you like to your children or grandchildren, but they might have to pay an unexpected tax charge if you don't think about this when making your plans. Inheritance tax (IHT) is the main tax to consider if you're giving away cash.