Property transfers involve several legal terms that can seem confusing at first. Two of the most common are transferor and transferee. Although they sound similar, they refer to two different parties in a property transaction.
The transferor is the person who transfers ownership or an interest in a property. The transferee is the person who receives that ownership or interest. Understanding the difference can help you know what you need to do, which costs may apply and how the transfer can affect your tax position.
Who is a transferor?
The transferor is the current owner or party giving an interest in a property to someone else. This can happen through a sale, gift, family arrangement, relationship breakdown or another type of property transfer.
For example, if you sell your house to another person, you are the transferor and the buyer becomes the transferee.
The transferor generally needs to provide the documents and information required to complete the transfer. Depending on the transaction, this can include the title details, contract documents, identification and other information needed for settlement.
The transferor also needs to meet the obligations set out in the contract. These may include providing the property in the agreed condition, meeting settlement requirements and dealing with any existing mortgage or other interests connected with the property.
The exact responsibilities can vary depending on the type of transfer and the state or territory where the property is located.
Who is a transferee?
The transferee is the person who receives the property or an interest in it. In a standard property purchase, the buyer acts as the transferee.
The transferee usually has to arrange finance, pay the purchase price and meet the costs associated with acquiring the property. They also need to complete the required identification and transfer documents and ensure they meet any applicable tax or duty obligations.
Once the transfer has been properly completed and registered, the transferee becomes the registered owner of the property or the relevant interest in it.
In NSW, for example, registration of a transfer passes the transferor’s estate or interest in the property to the transferee. The transferee can also become subject to certain rights and liabilities connected with that interest.
Transferor vs transferee at a glance
The simplest way to remember the difference is that the transferor gives and the transferee receives.
The transferor generally focuses on transferring their ownership or interest and meeting their contractual obligations. The transferee focuses on acquiring the property, paying the required amount and completing the steps needed to become the new owner.
Both parties may need to work with a conveyancer or solicitor to prepare documents, arrange settlement and make sure the transaction follows the relevant state or territory requirements.
What taxes and duties apply?
One of the most important financial differences between the two parties involves transfer duty, commonly called stamp duty.
Transfer duty is a state or territory tax, so the rules differ across Australia. In NSW, the transferee generally pays transfer duty when they acquire property or an interest in property. Sellers and transferors do not pay transfer duty.
The amount of duty can depend on factors such as the property’s dutiable value, the type of transaction and whether an exemption or concession applies. In NSW, the dutiable value generally refers to the higher of the purchase price or the property’s market value.
Some transfers may qualify for an exemption or concession. For example, NSW provides certain exemptions for eligible transfers between married couples or de facto partners involving a principal place of residence or vacant residential land intended to become their principal place of residence.
Because duty rules vary between jurisdictions, both parties should check the requirements that apply where the property is located.
What about capital gains tax?
Capital gains tax, or CGT, can also matter when property ownership changes. The transferor may need to consider whether the transfer creates a capital gain or capital loss.
The tax treatment depends on factors such as how the property was used, when it was acquired, the type of transfer and whether a specific CGT exemption or rollover applies.
The Australian Taxation Office states that CGT generally applies to changes in ownership of CGT assets acquired on or after 20 September 1985. However, special rules can apply in situations such as a marriage or relationship breakdown.
For certain transfers between spouses following a relationship breakdown, a CGT rollover can apply. This can allow the transferor to disregard the capital gain or loss from the transfer. The transferee generally takes on the relevant property and cost base and considers the CGT consequences when they later dispose of the property.
This means a property transfer does not automatically mean that the person receiving the property immediately pays CGT. The circumstances of the transfer matter.
Why professional conveyancing support matters
Property transfers involve more than signing a document and changing a name on a title. Both parties need to complete the correct legal and financial steps within the required timeframes.
A conveyancer or solicitor can help the transferor prepare the required documents and address issues that could delay settlement. They can also help the transferee understand their obligations, arrange the necessary searches and documents, and manage settlement requirements.
In NSW, property transactions must be lodged online through an Electronic Lodgment Network Operator, which only licensed legal professionals can access. A qualified solicitor or conveyancer can also assist with the duty application and settlement process.
Final thoughts
The difference between a transferor and transferee is straightforward. The transferor transfers the property or an interest in it, while the transferee receives it.
However, the responsibilities, costs and tax consequences can become more complicated depending on the type of transaction and where the property is located. Transfer duty generally affects the transferee, while the transferor may need to consider CGT and other obligations.
At Easy Link Conveyancing, we help clients understand their responsibilities and guide them through the conveyancing process. From preparing the required paperwork to managing settlement requirements, we aim to make property transfers simpler and less stressful. Getting professional conveyancing support can help both parties avoid costly mistakes and complete the transfer with greater confidence.