How to lend money to our son for property

Viewing 8 posts - 1 through 8 (of 8 total)

sinders
Member
@sinders
Join Date: 2012
Post Count: 11
May 6, 2013 - 3:26 am
Hi All,
I am seeking advise for! How to make a 0% loan for a property to a son legally.
And receiving principle payments only without being assesed as income.
Can anybody provide some advise on this.
Thanks
Sinders
Jamie Moore
Participant
@jamie-m
Join Date: 2010
Post Count: 5,069
May 6, 2013 - 6:04 am
Hi Sinders
Not a legal eagle (Terry W will probably advise) but I assume you can have something written up by a solicitor.
If the funds are being used by your son to secure a property, the lender may request that you sign a letter or stat dec declaring that the funds are non repayable – may or may not come into play here but thought it was worth mentioning.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone Me
Mortgage Broker assisting clients Australia wide Email: [email protected]
sinders
Member
@sinders
Join Date: 2012
Post Count: 11
May 6, 2013 - 8:06 am
Thanks Jamie. But my main concern is the repayments back to me might be assesed as income. By the ATO
Jamie Moore
Participant
@jamie-m
Join Date: 2010
Post Count: 5,069
May 6, 2013 - 9:18 am
I can't see how it would – it's a private agreement between a family member that you're not profiting on. Ask your accountant.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone Me
Mortgage Broker assisting clients Australia wide Email: [email protected]
zorrohd
Member
@zorrohd
Join Date: 2013
Post Count: 34
May 6, 2013 - 10:35 am
Hi Sinders,
What a lovely way to help out your son. Gotta love our boys.
Can I just add a word of warning for the legal side of your generosity? One thing I found out the hard way is that when you live with someone for two years, they then have a legal claim to ALL your assets. Including gifts from parents. So you need to protect yourself and your son from the unlikely (but extremely unpleasant) event where he and his partner split up, and the ex tries to get their grubby hands on your gift to your son.
The repayments should not be assessed as income – they are only return of capital if it is a 0% loan. However I would STRONGLY. suggest you have the loan drawn up as something that IS repayable, otherwise it could be construed as a gift to your son and possibly leave you and him open to the situation above. Talk to your solicitor before you do anything.
Terry might be able to help you further with the legal stuff.
Hope you get it all sorted so you and your son are protected, and you are able to help him out with such loving generosity.
Cheers, Claire
Terryw
Participant
@terryw
Join Date: 2001
Post Count: 16,213
May 6, 2013 - 11:04 am
Yes, this is relatively simple. Just a written loan agreement should do. Doesn’t have to be at a commercial rate, could be nil interest.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email Me
Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
sinders
Member
@sinders
Join Date: 2012
Post Count: 11
May 6, 2013 - 10:37 pm
Thanks! Jamie,Claire and Terry
RPI
Participant
@rpi
Join Date: 2012
Post Count: 308
May 7, 2013 - 10:36 pm
Quite easy. Should be drawn up properly so each party is aware of obligations as well as being protected. Can also be secured if necessary.
regards
D
RPI | Certus Legal Group / PRO Town Planners
http://www.certuslegal.com.au
Email Me | Phone Me
Property Lawyer & Town Planner