Do You Really Need to Pay Stamp Duty on a Family Transfer in NSW?

Stamp duty. Just hearing those two words is enough to make most people groan. It’s one of those sneaky costs that always seems to pop up when you least expect it. And when it comes to transferring property within a family in New South Wales… well, that’s when things get a bit tricky.

Lot of people assume, “It’s family, surely I don’t have to pay stamp duty, right?” Unfortunately, that’s not how it usually works.

Let’s unpack this properly.

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So, what’s stamp duty anyway?

Stamp duty (technically called transfer duty in NSW) is basically a state government tax. You pay it when property changes hands—whether that’s a purchase, a gift, or even certain family transfers.

It’s not just pocket change either. Depending on the value of the property, it can run into tens of thousands of dollars. That’s why this whole question of whether family transfers are exempt gets people leaning in real quick.

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Family transfer… does that mean free pass?

Here’s the thing: not all family transfers are treated equally. The law doesn’t just look at the fact that you’re related. It wants to know the type of relationship and the circumstances of the transfer.

Take this example. If parents transfer the family home to their kids as a gift, stamp duty is still payable in most cases. Harsh? Yep. But that’s the law.

On the flip side, there are certain exemptions and concessions. For instance, transfers between married couples or de facto partners involving their principal place of residence—those can sometimes avoid stamp duty. But there are conditions. Always conditions.

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When do you actually get an exemption?

Let’s cut through the noise. Here are some of the clearer exemptions or concessions in NSW:

• Married or de facto partners: If you’re transferring your shared home (the one you actually live in), you can usually avoid paying duty. Doesn’t matter if it’s to put both names on the title or shift ownership percentages.

• Divorce or separation: Property transfers under a binding financial agreement or court order often avoid duty.

• Certain family farm transfers: Yep, rural families sometimes get a break. If the transfer is part of keeping the farm in the family, there are special concessions.

• Deceased estates: If property passes to beneficiaries under a will, duty usually doesn’t apply the same way as a normal transfer.

Outside of those? Chances are you’re looking at a stamp duty bill.

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Example time

Picture this. A mum owns an investment property in Sydney. She decides to transfer it to her adult son for no money, just as a gift. Even though it’s a family transfer, the son is still on the hook for stamp duty—calculated on the market value of the property.

Now compare that to a couple who jointly own their family home in Newcastle. One partner decides to transfer their share to the other. Because it’s their principal place of residence, and they’re married, that transfer is exempt from duty.

See the difference? Same “family transfer” label, totally different outcome.

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Why it feels unfair (and why it works this way)

It’s frustrating, no doubt. People often say, “But it’s staying in the family—why should the government care?” The answer is simple: the government views it as a property transaction, no matter the relationship. And with property values so high in NSW, the state isn’t about to walk away from billions in revenue.

That’s the reality. It’s not about fairness. It’s about tax.

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Pro tip: market value substitution rule

This one catches a lot of people out. Even if you “sell” the property to your child for $1, Revenue NSW doesn’t accept that as the dutiable value. They’ll look at the market value instead.

So if the place is worth $900,000, that’s what the duty’s calculated on. Doesn’t matter that the transfer price was a token amount.

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So what does this mean for you?

If you’re thinking about transferring property within your family, you need to stop and ask: does this fall into one of the exemptions? If not, you could be up for a serious bill.

This is why it pays (literally) to get proper advice before you do anything. A property lawyer or conveyancer who knows the ins and outs of NSW stamp duty laws can save you from nasty surprises.

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Common misconceptions (and the truth)

• “Family means no stamp duty.” Wrong. Most family transfers do attract duty.

• “I can just sell it for a dollar to avoid it.” Nope. Market value rules kick in.

• “All partner transfers are exempt.” Not quite—only in relation to the principal place of residence. Investment properties don’t count.

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FAQs

Do parents have to pay stamp duty when transferring a property to their children? Yes, unless it falls under a very narrow exemption (like certain farming transfers). Otherwise, duty applies at market value.

What about transferring property between siblings? Sorry, no exemption there. Full duty applies.

Is there a way to reduce the duty amount? Not really, unless you fall into one of the listed concessions. Duty is calculated on market value.

Can I avoid duty by putting my partner on the title after buying? Yes, if it’s your principal place of residence and you’re married or de facto, you can usually add them without paying duty.

How do I actually calculate stamp duty in NSW? Revenue NSW and several banks (like CommBank) have online calculators. Just plug in the value of the property.

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Final word

Family transfers sound simple but they’re anything but. The rules around stamp duty in NSW are tight, and most people end up paying unless they hit one of the exemptions.

Getting proper advice from a qualified property lawyer before you go ahead with a family transfer is essential. If you’re not sure where to start, services like Law By Dan can connect you with experienced lawyers who deal with stamp duty and property transfers every day.

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Disclaimer: This article is for general information only. It’s not legal advice. Always get advice specific to your situation from a qualified property lawyer or conveyancer.