Mum has a PPOR worth $730k but needs to move

Discussion in 'Accounting & Tax' started by JVG123456, 1st Feb, 2021.

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  1. JVG123456

    JVG123456 Well-Known Member

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    Long story short: My mum (68) has a PPOR in Box HIll, Melbourne (a 2 storey townhouse + garden). She's getting older and the stairs are a bit much for her, so wants to move to a single-level unit a bit further out of town.

    She's retired, and the house is either in her brother's name or a trust (for power-of-attorney reasons, she struggles with finances). It's owned outright (no mortgage)

    Her current house needs fixing up, new kitchen, painting, carpets etc before selling. Bit of animal-related cosmetic damage.

    Identical townhouse (sans cosmetic damage) next door just sold for $730k.

    I'm a first home buyer, as is my brother. I'm about to buy my first home elsewhere with my partner for $1m. Don't get any FHB benefits.

    Wondering if there are any ideas on what we can do to get my mum a new house (ideally $500-700k) and either sell or rent out her current one.

    Options I can think of:

    - I buy a house for her, I live in it to get the stamp duty + FHB benefits, then sell it to her + we sell her current place
    - Take out a bridging loan on her current property and buy a new one, then fix up + sell her current house.
    - We take out bridging loan, buy small unit for $500k, keep townhouse and rent it out (could get maybe $380/wk?)


    Any other options I'm missing? What would you do in this situation? Ideally we'd have some money left over for her retirement and to live off, as she has no savings.


    EDIT: Just realised I might've posted this in the wrong forum. If a mod sees and could move it to a better one, please do!
     
  2. Terry_w

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

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    She won't be able to get finance.
    If you buy and then sell her later there will be 2 lots of stamp duty
    She could potentially take out a bridging loan, but unlikely if her house is in someone else's name because of a financial management order.

    Get some advice on bare trusts perhaps.
     
  3. JVG123456

    JVG123456 Well-Known Member

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    I see. Should note that her brother is totally on-board with whatever we want to do and has her best interests at heart, so no conflicts there; if we got her a new house and needed to pay for a mortgage either he or I will most likely be paying for it! Not expecting my mum to be able to get finance by any stretch of the imagination :)

    I suppose my questions is about what "we" as a family unit should do, rather than what she should do; she's not privvy to nor really capable of being involved in the financial decisions being made so we just want to find the best way to take care of her as possible.
     
  4. Paul@PAS

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

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    Look into Centrelink granny flat concessions. This can allow you OR your brother to own a property with a GF "interest" (ie a downstairs room etc) that gives her rights to reside while getting benefits of no land tax etc. The concession allows her interest in that home to be a exempt centrelink asset and can be funded from sale of her (asset exempt) home. One issue is how the other sibling gets their share of her "estate" on her death. It does work better with one child situations or where mum has other assets to fund a death benefit beyond her home.

    Forget bridging loans. She has $0 income and no capacity to discharge a mortgage. Close to a zero chance of finance.
     
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  5. RENI99

    RENI99 Well-Known Member

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    Does she qualify for pension currently - if not what does she live off? If she does so then she should qualify for the stamp duty exemption/reduction - Pensioner duty exemption or concession | State Revenue Office. So the two lots of stamp duty would be reduced if you bought and sold to her although I am not exactly sure what you are trying to achieve.

    Is there an option for you to buy something together where you have a %share of the property - you have as an investment and she has as a PPOR and pays you some rent out of the proceeds of the sale.

    Do you see the PPOR as a good investment and want to keep it? Maybe a good time to consider selling depending on where it is.

    Could she move in with family -> PPOR is then done up and sold (or sold as is - test the market), then you purchase something else together (would you qualify for a loan?) that means she still qualifies for the pension and you have an investment. You could also increase your ownership over time if she was short of cash. So you have a long term investment and she has security, cash and a suitable place to live. She would pay you market rent for your % of the house.

    I am not an accountant or financial advisor so to seek professional advice. Just something we are looking at with our family. We have also loaned money short term to enable family to buy - formal loan so no gifting as such - so borrow on your equity if you have some.