How to release equity for retirees

Discussion in 'Financial Independence, Retire Early (FIRE)' started by freddy, 8th Jan, 2022.

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  1. balwoges

    balwoges Well-Known Member

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    My kids [now middle aged] are already living in their inheritance ... :D
     
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  2. jaybean

    jaybean Well-Known Member

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    I choose to interpret that as them moving back in, and you've been relegated to the garage.
     
  3. balwoges

    balwoges Well-Known Member

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    Ha Ha, I bought a big house with a self contained flat below for son and daughter occupies a bedroom upstairs, we get along as a family and I would not be able to live in a house by myself these days. They both work, son does the lawns etc and washes my car and daughter who only arrived back home when Covid struck helps out with housework, they like my cooking and apart from that they take care of themselves and I have the comfort of knowing I am not alone.
     
  4. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    I saw a case of this and Centrelink considered the amount income. Not taxable but considered a inflow (they call is non-repeating or something like it) and this can count to the income test. Case was a parent on pension being given extra funds regularly by bank transfer by son who won prizemoney. Centrelink supended the pension thne asked about it. Also wise to avoid a stream of such issues as Centrelink do access bank accounts and (quickly) review them for regular amounts or larger one offs and that could be a trigger. The rule is the "14 days rule" which will cancel the pension if you dont advise them so it can be assessed. This is like an avoidance rule. The "unlikely to happen again" is often the fatal bit (below link). Centrelink tends to be more agreeable when a one off amount is to help for something specific eg new kitchen, operation etc and then its like a reverse gifting. Or giving $$ to a parent to assist one offs like travel etc.

    One way to avoid the detection issue to givea parent "minor benefits" that arent in money eg a regular shopping card or access to a debit card that is in the childs name for groceries etc :)

    Lump sums while on income support - Age Pension - Services Australia
     
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  5. henry123

    henry123 Member

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    Freddy would be really interested in what your friend lands on. There are a few reverse mortgage type products out there at the moment, but most have pretty high interest rates which eat into your equity very quickly. These rates are also going to go up as rates rise over the next 6-12 months.

    e.g.
    2Be → 6.95% p.a.
    Heartland→ 7.12%

    The government has a lower interest rate option that they started to cover the reverse mortgage space after the Big 4 exited. You can read more about it here

    I'd be interested in what they land on as I am interested in the space.
     
  6. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    See this Freddy


    Legal Tip 407: Informal ‘Reverse Mortgages’ from Adult Children and Estate Planning