A bit of a long explaination but I value the level of advice I see people offering on this forum. The more details I give I guess the better people can help.
My mum has decided its time to sell her home in Perth and move to a quiet town north of Geraldton. She owns her home but would like to be able to have a far bit of “play” money left over after making the move as she never has had more than two pennies to rub together. She is on the old age pension and doesn’t want to lose that. I suspect she will come out with about $200K from the sale. Where she wants to live however is just as expensive or more so than Perth. Therefore my sister and I have purchased a block of land for her (in our names) so that she can get a transportable home put on it with all the trimmings. This should cost around $100K. This will leave her with about $100K to go into a allocated pension or whatever. However she wants to give my sister $20K so she can buy herself an investment property for renting which is what my sister would of done with the money if she hadn’t bought the land.
My questions are:
1) Can she give my sister this money without either of them having to pay tax on it? What is the limit she can give?
2) I can calculate what will happen to her pension payments if she has $100K invested some where but if she sells and has the money sitting in a bank account for 6 months before she buys again is she going to lose her pension during that time?
Thanks in advance for all advice.
Namasté
Namasté,
Most of your questions can be answered by Centrelink. They have a financial advising service which is supposed to help people in your mother’s situation.
I believe that she can only gift $10,000 per year to an individual and not exceed the ‘deeming’ provisions. (She can give as much as she likes, but is deemed to be earning interest on amounts over $10,000.)
Also, I hope that you have the legals done correctly as far as your mother putting a house on land owned by you and your sister – allow for changes in circumstances, e.g. you/your sister getting married or divorced etc!
Also check with Centrelink on how her benefits will be assessed: as a homeowner, or a non-homeowner? I think the legislation assumes the ownership of both house and land.
Terry.Terence McMahon
HomeWin
Finance
The topic ‘Gifts and the tax/pension implications’ is closed to new replies.
