Upgrading Family Home with assistnace from Parents

Discussion in 'Investment Strategy' started by geopat, 4th Apr, 2018.

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  1. geopat

    geopat New Member

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    HI All
    I am after some preliminary advice before talking to my Solicitor/Accountant. My parents are elderly and rather than them stay by themselves, we have decided it would be best for them to live with us. I own my home and they own their home.

    Our basic idea at the moment is:

    1) My parents to sell their home (which they own outright).
    2) Rather than sell my home, I would keep my home and rent it out (note : I also own my family home outright).
    3) My wife and I apply to get a loan from the bank and use this loan (with my parents home sale money) to buy a "larger" accommodating home for them and my family. Note the money from renting my home goes to paying the loan we took.

    Any suggestions on this.??? any risks/benefits???? is it a silly idea all together???. FYI the home is in Brisbane and it can not be refurbed (no space on property left).

    If the idea above has potential, I had also thought about transferring my current home to a trust (to avoid significant tax, if it ends up being positive geared--but really not sure on this idea).

    I appreciate any help,. Maybe someone else has done something similar
     
  2. Terry_w

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

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    Consider:
    Who will go on title?
    If joint then how?
    Parents on social security benefits?
    How will parents contribute if not on title?
    Disputes - what if they want to move out?
    Do you have siblings?
    Wills
    What if one of you die? (you could go first)
    Resulting and constructive trusts?
    elder abuse allegations
    independant legal advice
    Loss of parents main residence exemption
    pre-CGT?

    etc etc
     
  3. Scott No Mates

    Scott No Mates Well-Known Member

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    • Will your parents still be eligible for the pension if they don't own a ppor?
    • What will they so with the cash? This may affect their eligibility for the pension if they give you the money
    • Is their house a pre-CGT asset?
     
  4. Marg4000

    Marg4000 Well-Known Member

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    Do you have siblings?
    Marg
     
  5. geopat

    geopat New Member

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    Hi thanks for the responses. Just to confirm this idea is part of a plan of my parents for me to assist them. They dont want to go into retirement village and i have no siblings.

    As for the pensiom..thats a good question. When plan on purchasing as a joint title..and therefore as they purchased a property..they should not have pensions altered.

    The home they currenly oen outright has been their home for the last 8 years.

    When i take out a loan (it will be in my name ) and i will pay the loan off with interest etc...i just needed the bigger home to accomodate my parents...so i am hopeful of a house with small granny flat or at leaset a bedroom downstairs.

    Not sure of why elder abuse allegations is relevant. In medeteranian culture..it is normal for children not to "dump" parents in a home like Australians seem to prefer...and for their kids to take care of them.
     
  6. The Y-man

    The Y-man Moderator Staff Member

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    Not from you - It was mentioned becuase if you *did* have siblings and "well meaning" others (usually stakeholders who might potentially lose out) who will accuse you of "forcing" your parents to sell out etc.

    The Y-man
     
  7. The Y-man

    The Y-man Moderator Staff Member

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    Just remember you will need to declare rental income, but the interest cost will not be tax deductible.

    The Y-man
     
  8. Terry_w

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

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    I was not implying that you would abuse your parents, but you have to be mindful of allegations especially if you will be buying in a name other than that of your parents.

    Your other racist comments are uncalled for.
     
  9. Terry_w

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

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    How would you borrow alone if you are not the sole owner? What security would you use?
     
  10. Marg4000

    Marg4000 Well-Known Member

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    Don’t judge.

    My parents went into care because they had Alzheimer’s and needed constant, 24/7 care which was impossible to give at home despite our best efforts.

    Physical declines are one thing, but mental issues are much harder to cope with. Try managing on less than an hour of sleep at any time when an Alzheimer’s patient has no concept of night or day.

    We took the time to carefully investigate care facilities and chose ones that gave exceptional care. With this constant attention my mother lived several years beyond the most optimistic predictions.
    Marg
     
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  11. geopat

    geopat New Member

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    Sorry. Marg

    I should have clarified. Clearly where professional help is needed..then it is needed. But as far as i can see..the elderly here(of sound mind) appear to present as a liability in many cases and are pushed into homes..this is unheard of in most places in europe.
     
  12. Terry_w

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

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    If that was the case aged care facilities would surely not exist in Europe?
     
  13. geopat

    geopat New Member

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    Terryw
    You're correct. Certainly not to the extent of here
     
  14. Marg4000

    Marg4000 Well-Known Member

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    I don’t know of anyone “pushed” into homes. Some choose retirement villages for the lifestyle and companionship choices they offer. Many prefer to stay in their own homes as long as they can.
    Marg
     
  15. radson

    radson Well-Known Member

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    Yeah Austria, Germany, Luxembourg, France, Sweden, Finland, Norway etc spend much more on Long Term Care facilities

    upload_2018-4-4_15-24-4.png
     
  16. Ed Barton

    Ed Barton Well-Known Member

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    I think it's important to make a distinction between retirement villages and nursing homes. Also each family is different.

    Most people choose RVs for the reasons you've stated plus might not be up for the upkeep on a home and mobility, can't drive etc - but don't need nursing care. In some cultures when this time comes the parents expect to move in with the kids and the kids expect them to. I think the aussie culture is less inclined.

    Then there comes a time when the parents need constant attention and not quite 24/7 nursing care. At this point some cultures are more likely to provide that care by children, grandchildren etc.

    As a young man going to Uni when my grandmother needed that care I took a year off Uni and looked after her. Blue nurses came once/twice a week to provide a bit of nursing care. I think if I wasn't around mum would have quit work to look after gran. Eventually we couldn't cope and gran had to go to a hospice. I think aussie culture is less likely to make those sacrifices than other cultures.

    Both my mum and gran expected the family to provide that care and for gran not to go to a "home" until the family couldn't cope anymore. My parents are migrants from England so not the cultural thing. I think it was more that my grandmother came from an era where that was how things were done and there was little assistance from the govt. Also, to go to a "home" of any sort was seen as being sent to a knackery.

    Every family is different.
     
  17. Marg4000

    Marg4000 Well-Known Member

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    This is true.

    To make assumptions along ethnic or racial demographics is offensive.
    Marg
     
  18. Angel

    Angel Well-Known Member

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    I notice the countries with the highest per capita GDP invested in LTC facilities are the ones where Euthanasia is most widely acceptable.
     
  19. radson

    radson Well-Known Member

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    I dont really see the correlation. Greece is certainly an outlier

    upload_2018-4-5_11-18-51.png
     
  20. Angel

    Angel Well-Known Member

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    Greece isn't on the graph.