Want to help out the parent!!!!!

Hi, We have been discussing with our parent the need for them to move to a newer, lower maintance house. We also want to get into the property market and are struggling to afford to buy where we like. Which got us to thinking is there a way that we could do this together.

They pay for 50% of the purchase price and we buy the other 50% as an investment, it would give them some extra cash from the sale of there property and security. They would need to pay us "rent" as well to help cover our loan as the investment piece.

Has anyone got experience in this type of thing or does it just not work.

There are heaps of pros and cons to this I understand that, just like to hook up with some people that has had some experience in doing this.

 

See my tip in the legal section about helping parents.

 

Why would they want to do that ? if they want to give you money, they will, if they want to invest, they can do it together without you.

Maybe you should consider paying them because they surely already paid out a bunch for you ?

 

Also the property would be subject to cgt

 

Oh, and why do they need a lower maintenance house ? you could offer to help there if you wanted, or they can simply pay for assistance.

 

Make them an interest free loan perhaps. Repayable out of their estate.

 

Hi Dabbler,

They are 70yo and can not do it themselves and the house needs some work they have lived there for 50 years and they want to get some equity out and use it, their super will not be enough

We don't have heaps of money and feel pouring money into that place will only be a waste.

We want to get them into a new place near us, Croydon Vic, it is getting a bit out of their $$$ range to get them something outright, going in together makes this more achievable

We just thought this might be a good option for them to be comfortable and us to get and investment property of sorts with guaranteed occupancy and reliable tenants.

 

Sounds like a dud deal for your parent.

 

Yeah, but no different to any other IP.

 

Quite possibly, but we are just kicking the idea around, though this might be a good place to get some advise and opinions....

 

But atm both your home and their home are cgt exempt.

 

Perhaps their home is pre cgt and therefore exempt even if rented out. You could potentially 3 exempt properties between you

 

Not sure how that would work, they don't have a lot of $$$ up there sleeves to have an IP and Primary residence. Unless I'm missing something?

 

Lend them money to buy a new PPoR.

When they die can sell both of their properties with no CGT. (Assuming one bought pre CGT and one with exemption because PPoR).

Do you have siblings or anyone else that could contest the will?

 

I suggest they reverse mortgage their house if they need a pension top up.

Or perhaps they would prefer to buy into a really nice retirement village, full of activities to make the most of their active life?

Alternatively, contact the local Council - there are subsidised services for home help, meals, handyman services etc if you don't have time to assist them when they need it.

These services are designed to allow seniors to,stay in their own home as long as they wish. Which is what we all want, surely?

 

I would not mix them up with an IP that you may want.....esp if there are other siblings.

Also make sure it is what they want.

Look at all options and what will make them happiest.

We have 5 generations alive, used to the oldies being independent & we do have talks with them at times, they all will be staying put, there is assistance they can get with anything that is becoming very difficult, there is costs to moving too. As Terry says, you can probably help them get another home and have a rented IP that is CG tax free possibly.

 

See
Legal Tip 25: Children helping parents out https://propertychat.com.au/community/threads/legal-tip-25-children-helping-parents-out.1323/

 

Damn. My parent's old home was pre 1985 and they sold it in 1996/7. And since they sold it (20 years ago) it's gone up in value 12% pa... to think all future gains on it would be CGT free...

 

I would like to endorse that Damn!

CGT is often forgotten about on the main residence - because people consider it exempt they don't really think about it.

 

Did they buy somewhere else?
Did their "new" place go up over that time?