Giving the house to the kids now, or leaving it to them in your will

Where the '30%' idea comes from

Several clients have asked us the same question in the last few months: should I transfer the house into the children's names now, because if I leave it in my will they will lose 30% of it to the government?

The premise is wrong. Australia abolished death duties in the late 1970s. There is no inheritance tax, no estate tax and no probate tax on the value of what you leave behind.

The incorrect assumption usually comes from one of three places:

• Superannuation. If your super is paid to an adult child who is not a financial dependant, the taxable component is taxed at 15% plus Medicare, and an untaxed element can be taxed at 30% plus Medicare. That is a real tax — but it applies to superannuation death benefits, not to your house.
• Overseas rules. The United Kingdom has inheritance tax above a threshold and the United States has estate tax. People who read overseas material, or who have family there, often assume the same applies here.
• Capital gains tax. CGT can apply to a property in an estate, but it is a tax on the gain, not on the value. In most cases the family home attracts no CGT at all.

What actually happens if you leave it in your will

Transfer duty: nil. A transfer of property from a deceased estate to a beneficiary in accordance with the will is exempt from transfer duty in Queensland. The Titles Registry fee is a few hundred dollars. There is no duty on the value of the house.

Capital gains tax: deferred, and often eliminated. Death is not a CGT event for the estate. The property passes to the executor and then to the beneficiary with a rollover, so no CGT is triggered by the death itself.

• If the property was your main residence and it is sold by the estate or the beneficiary within two years of the date of death, the sale is generally fully exempt from CGT.
• If the beneficiary keeps the property and moves into it as their own home, the main residence exemption can continue to apply to them.
• If the property was an investment property, the beneficiary inherits your cost base and pays CGT only on the gain from your original purchase when they eventually sell — with the 50% discount available if the combined holding period exceeds twelve months.
• The 50% discount has been abolished from 1 July 2027 and replaced with CPI cost base indexation in the recent Treasury Laws Amendment (Tax Reform No. 1) Act 2026. The impact of these laws on CGT in estates will be the subject of a separate article — but for these purposes the new CGT laws do not introduce an inheritance tax or a tax on death.

Land tax and pension: unaffected while you are alive

The property stays in your name, so it stays exempt from land tax as your principal place of residence, and it remains an exempt asset for the age pension assets test.

The cost of doing nothing: a family home worth $900,000, left to two children under a will and sold within two years of death. Transfer duty: nil. Capital gains tax: nil. Total government cost: registry fees only, a few hundred dollars.

What actually happens if you transfer it now

Transfer duty is payable, even though it is a gift. Queensland charges transfer duty on the market value of the property, not on what was paid for it. Transferring the house to your children for no consideration, or for a token $1, does not avoid duty — the Commissioner assesses it on a valuation.

Capital gains tax can be triggered on the day of the gift. A gift is a CGT event. The market value substitution rule treats you as having sold the property for its market value on the day you transfer it, even though no money changed hands.

• If it is your main residence and always has been, the exemption still applies and there is no CGT.
• If it is an investment property, a holiday unit, a second home, land, or a home that was rented for part of the time you owned it, you can have a real CGT bill in that financial year — with no sale proceeds to pay it from.
• Centrelink treats it as a gift for five years. You can gift $10,000 in a financial year and no more than $30,000 over five years. Anything above that is a deprived asset and is counted in the assets test, and deemed under the income test, for five years from the date of the gift.

The risks that have nothing to do with tax

Once the title is in a child's name, the house is exposed to that child's life.

• Relationship breakdown. The property becomes an asset in your child's property settlement if their relationship ends.
• Bankruptcy and business failure. A trustee in bankruptcy takes the child's interest, and a gift made in the five years before bankruptcy can also be clawed back.
• The child dies first. The house then passes under your child's will, which may leave everything to their spouse, who may remarry.
• The child changes their mind. Nothing compels a registered owner to let you keep living there, or to keep a promise about splitting the proceeds with siblings. A verbal family understanding is very difficult and very expensive to enforce.
• You lose flexibility. If you later need to sell to fund a refundable accommodation deposit for aged care, you now need your child's cooperation.
• Fairness between children. An early transfer to one child is a live issue in a family provision claim after your death, and hardening a family dispute is far more expensive than the duty you were trying to avoid.

Better ways to achieve what people are actually asking for

Almost everyone who asks about transferring early wants one of three things: certainty for the children, protection of the home from being consumed by fees, or the avoidance of a fight. There are cleaner ways to get each.

• A properly drafted will, with a testamentary trust where it is warranted. A testamentary discretionary trust gives the children some degree of asset protection from relationship breakdown and bankruptcy, and provides some flexibility on taxation of distributions, without giving up ownership during your lifetime.
• A loan and mortgage instead of a gift. Where you are helping a child into a property, documenting the advance as a loan secured by a registered mortgage protects the money from that child's spouse and creditors, and lets it be brought back into your estate.
• A written granny flat arrangement. If the plan is that you move in with a child and contribute to their home, put it in writing. Done properly, it also has a specific Centrelink treatment.
• An enduring power of attorney and advance health directive. Most of the fear behind the early transfer question is really about losing control later. Attorney documents deal with that directly.
• Superannuation death benefit planning. If the 30% figure came from super, the answer is a binding death benefit nomination and, where relevant, a withdrawal and recontribution strategy — in conjunction with your accountant or adviser.

What we suggest you do

We will tell you plainly whether an early transfer helps you or costs you. Most of the time the conversation ends with a better will rather than a transfer.

• Do not sign anything, and do not let anyone add a child to your title, until you have had professional advice from your lawyer and accountant.
• Get the actual figures: a market valuation, an exact duty assessment, and CGT advice from your accountant if the property has ever been rented or is not your home.
• If a pension or aged care is in the picture, get the Centrelink deprivation position modelled before, not after.
• Review your will. In most cases the outcome people want is achieved by the will, at a fraction of the cost.

Gifting property to children in Queensland — common questions