Pros
- Enter the property market faster. In Australia’s expensive property market, co-buying with your parents may be the only way that some young Australians can realise their property dreams.
- Increase your buying power. By using the equity in your parents’ home and sharing the repayments, you can afford to think bigger when choosing your first home.
- Borrow less. By teaming up with your parents you could borrow less money, shrinking your loan size and making repayments more affordable.
- Share the responsibility. Sharing the responsibility of loan repayments with your parents takes some of the anxiety out of the situation and means that you have a safety net if you get into financial difficulty.
My daughter and partners income is not enough to get a loan in their name, the option is for my wife and I to go in with them to help them as even with us as guarantors they still can’t get a loan.
What are the rules regarding Capital gains tax when they sell? Does it affect my wife and I or just the property?
Does it reduce after so many years they have lived there?
Hi Glenn, This would depend on how the loan and title are set up. In a broad sense, since you’re not the resident, you might be liable for capital gains on your share of the property value if the house was ever sold. But you would need to seek specific legal advice on this point.
Thank you for this article. I wanted to find out about options to purchase a property with my parents – they are retired so will sell their current property to buy something more suitable. If I decide to contribute to the purchase with them, I am wondering how it would work regarding it being a PPOR for them but an IP for me. Would I charge a portion rent?
Hi Amy,
You would need to work out these arrangements with your parents and purchase the property as a joint venture. The specifics will depend on what you all agree is fair. For instance, you might decide that their contribution is a bigger deposit, and your contribution is payment of the remaining weekly mortgage, while all parties split the cost of insurance and rates.
Or, you might decide upon an amount of rent they pay you each week, and you take care of all the ongoing maintenance costs.
It would be a good idea to speak to an accountant, as the arrangement you come to will have tax implications; the property must be income-producing for you to claim property investment tax deductions, for instance.
Whatever you decide, it would also be worth engaging a solicitor to draw up a legal document that outlines who is responsible for what.
Hope this helps!
Hi team – loved this article. I have talked to so many friends about buying with their parents and it still feels like a taboo topic. If you were buying with your parents where would you go to get information? Is there anywhere that’s a good one-stop-shop resource?
Because of my own experience, I started a community for people in this exact situation, so we can learn from one another and talk to experts as we’re going through the buying process. If anyone is interested it’s at: hello.fledge.au
My parents would like to gift me a house (buying with cash so no finance needed). I’m just wondering if they are able to buy it, but put it in my name and if there are any implications in doing this. For example tax etc.?
Thanks!
Hi John,
Yes, your parents can purchase a property in your name. If you’re still a minor, they simply need to put proper notations on the title. When you turn 18, they need to present a copy of your birth certificate and evidence that you’re still alive to the relevant government department who will then make the necessary title changes. There will be no stamp duty or capital gains tax on this title change in this scenario.
For other circumstances, stamp duty may be applied when buying a property. The exact amount and exemptions depend on the state or territory you live in and the price of the property purchased. You may utilize your state government’s stamp duty calculator to have an idea of how much it would cost. You can also consult a tax advisor.
Refer to our relevant guide on gifting property here.
Kind regards,
Rebecca
I plan to buy a property with my son using the Joint tenants method. My intention is once I die the property is automatically passed to my son, my only concern is whether he need to pay extra stamp duty for the new 50% ownership? Thank you.
Hi Sarah,
If a joint tenant passes away, the other tenant/owner retains ownership of the whole property. So there is no stamp duty because you both own 100% equally, not 50% each if that makes sense?
If you are concerned or have more legal questions, you should definitely consult your conveyancer.
I hope this helps.
Regards,
Richard