Parents parking money in my offset?

Discussion in 'Accounting & Tax' started by Alwayslearning, 17th Dec, 2016.

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  1. Alwayslearning

    Alwayslearning Active Member

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    Hi All,

    I haven't seen this discussed specifically so I'd thought I'd join and possible add something of value - as a long time lurker!

    The parents have offered to park a large amount of money into my offset account and I'm wondering if anyone has been in the situation. Over 100k.

    This is not a gift - they are financially very comfortable and retired so have suggested it as a help up. My older siblings are aware and I wouldn't consider it mine under any circumstances.

    This would take my IP apartment well into positive geared territory. Apart from the likely tax bill, are here any pitfalls with this arrangement?

    thanks
    Thomas..
     
  2. Scott No Mates

    Scott No Mates Well-Known Member

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    Risk if you or your parents pass away and there is nothing noting that this is their money on loan to yourself.
     
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  3. Ross Forrester

    Ross Forrester Well-Known Member

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    Just get a loan document prepared together with a second mortgage registered.

    Estate planning and matrinonial
    Consider paying interest as some siblings can get envious irrespective of what they say to your face.
     
  4. Terry_w

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

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    I think this was discussed about a month ago.

    They are lending you money so make sure the agreement is in writing. Consider the tax implications if there is interest and they should take security for their loan.
     
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  5. Ouga

    Ouga Well-Known Member

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    "Trying is the first step towards failure" Homer
    If it'a not documented like suggested above, isn't pretty much the same as if they gifted it to you with the verbal understanding you will gift it back to them upon their request?
    Maybe if your siblings are aware of this, it is enough and would keep things simple?
    No clue whether there's would be tax implications if they gifted it to you and you would gift it back a few years later when they request it?

    Will you want to go the formal route with all the paperwork?
     
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  6. andrew_t

    andrew_t Well-Known Member

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    Have been through this and need an agreement in place. Seeked financial advice via price financial and highly recommend them. Refer @Paul@PFI
     
  7. Terry_w

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

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    There are plenty of legal cases on undocumented gifts or loans.

    What happens is either the lender of the borrower dies. The executor or other family members argue it was a gift with others arguing it was a loan.

    Whatever you do document it!
     
  8. Ouga

    Ouga Well-Known Member

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    "Trying is the first step towards failure" Homer
    How would you go about documenting a gift?
    Would a bank transfer with the description "gift" be sufficient?
     
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  9. Terry_w

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

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    No.

    A deed of gift would be the way to go.
     
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  10. Alwayslearning

    Alwayslearning Active Member

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    Thanks for all your input guys.

    If it goes forward, will defiantly document it just to be sure.

    Cheers.
     
  11. Terry_w

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

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    Not only document it, but each of you should get legal advice.

    One thing to look out for is the loan becoming unenforceable after a period of time if there are no payments made - limitations act.
     
  12. Ouga

    Ouga Well-Known Member

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    "Trying is the first step towards failure" Homer
    Of course, would have been too simple otherwise!

    Thanks for the reply!
     
  13. Terry_w

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

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    I give just needs to be delivered to be effective - transfer of title. In the case of cash this is handing it over.

    But you should do a deed as it records intention. Without proof of intention it would be easy for someone to argue it was just a loan.
     
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  14. Cactus

    Cactus Well-Known Member

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    Given it is not a gift but an interest free loan to be repaid on demand, the paperwork only benefits your parents and siblings. For you I would not stress, unless you are worried about a dispute with your de facto partner or wife if you have one. Otherwise the risk is only to your parents and siblings in which case why spend time money and energy on mitigating their risks.
     
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