All Topics / Help Needed! / giving money to parents

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  • Profile photo of investhutinvesthut
    Member
    @investhut
    Join Date: 2007
    Post Count: 73
    January 31, 2011 - 8:45 pm

    Hi All,

    my parents live with me and currently i have 140k in redraw in my home loan….

    my parents dont work here and have not purchased a home ever. they dont get a single dollar from centrelink, bcoz of their PR arrangement.

    many people hear have said giving money to kids. is it ok if I withdraw 140k straight from my home loan.

    then my parents purchase a small prop for 140k or so and live in it for 2-3 years.

    they should still get FHBG and stamp duty free right???

    will i need to write/declare something to the TAX man/ATO that I am doing this?

    any other advise comes in anyones mind, do let me know.

    thanks heaps

    investhut

    Profile photo of luke86luke86
    Participant
    @luke86
    Join Date: 2010
    Post Count: 470
    February 1, 2011 - 1:57 am

    It is your money, so I cant see why it is a problem with the ATO. You can do what you want with it.

    One thing is with tax deductability of the interest of your loan. I am assuming that the home loan that your are withdrawing money from is the house you currently live in. If you decide to move out after giving your parents the money, the interest on that $140k will not be tax deductable as even though it would be on a loan that is an investment property, the $140k redraw is counted as new borrowings and so because the purpose of the loan is a gift it can not be claimed.

    Not sure about the FHBG question but I am pretty sure they would still be eligible proved they have never owned a home before. Best check that with someone who is certain though.

    Cheers,
    Luke

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213
    February 1, 2011 - 11:25 pm

    You should probably have a loan agreement with your parents and also look at taking a mortgage over their property. There may be a slight chance of bankrutpcy in the future and you may wish to protect your investment. On the other hand if you go bankrupt, then this will still be your asset so you need to consider it carefully and speak to a lawyer.

    As for tax, i don't see any issues other that those Luke mentions.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

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