Buying Property Now for Elderly Parent

WIth house prices rising/lack of supply, I'm looking to purchase a villa/unit (in my name) in an area of Perth with the intention in the years ahead, my elderly parents will buy the property off me and sell me their family home when they can no longer manage (i.e. exchange the properties). They are on aged pensions so need to maintain a principal residence to avoid losing their pension/deeming issues.

Under this scenario, transfer duty will be paid twice (once now and then again when transferred to them).

Is there a way to structure this purchase in such a way that avoids paying transfer duty twice?

I've looked into declaration of trusts/bare trusts but I believe these structures need to be report to aged pensions, so could lose their pensions.

 

My thoughts only, but you are thinking too hard.

If there are no other siblings it is reasonably simple and can avoid lots of stamp duty and commissions. But if other siblings are involved then may need some tweaks.

Buy the property that will suit your parents needs in the future and keep it in your name.
When the time suits they move into that property and pay you rent (in some informal or formal way). You move into their PPOR and pay them rent (in some informal or formal way.)

If you keep it within the family all the above is doable without necessarily changing the ownership structure of each of the properties.

From a Centrelink perspective (ie pension) then numbers need to be crunched but you may find that the above can be achieved without reducing pension entitlements. Timeframe is also a consideration.

BTW, I am not suggesting anything dodgy, just suggesting looking at the issue from a different perspective.

What you are really asking is how to reduce stamp duty without affecting old aged pension entitlement, whereas the real solution may be somewhere in between (or not).

 

Thanks Jaydee. The extra bit of information which I should have mentioned is there are 2 siblings and both are not based in WA and unlikely to return anytime soon.

 

Yes

 

Without affecting aged pensions etc / deeming issues?

I'm aware of declaration of trusts and the like but they would need to be reported to pensions so unsuitable.

 

Okay.

I retract the above suggestion as it is unlikely to work with 3 siblings unless you are extremely close and on the same page.

Family PPORs can be a major issue between siblings, so I suggest walking away from the idea of buying parent’s PPOR unless parents are deceased and purchase or transfer is from the estate.

You obviously like the house, but my thoughts are the only reason it is attractive is that you think you can buy it below MV given that it is in the family. Other siblings won’t necessarily agree with price or view point and it can be a major issue.

There are so many other houses available that I would suggest you find an alternative.

Lastly, what looks attractive now will unlikely look the same in 5 years time, so buy what suits your current needs and likewise for your parents.

 

Yes should be possible. Something you need legal advice on

 

Surely the huge risk here is what if they dont want to live there or are unable to due to care requirements?

What might suit someone now in their 60's/70's might not suit them in a decade.

What if one sadly passes and the other needs assisted living?

What if they both sadly pass and it was all for nought?

It sounds like you are trying to do the best for your parents future but the changes in someones life one decade to the next is vastly different especially from 60 onwards. Having options is great but trying to pave a fixed pathway is surely high risk.

 

This won’t fly with Centrelink.

Once they move elsewhere, their house will be treated as an asset (possibly some period of grace) and then will be included in the assets test which, given the value of houses, will probably wipe out their entire age pension leaving them with no income. Plus any rent they receive will be treated as income - double whammy.

May be better to wait until THEY want to downsize, then they can sell their house (maybe to you) and you can help them buy something suitable to them.