Is a gifted deposit tax deductible?

[Dinamo]

Hi guys,

Just had a quick question. I'm buying my first property, I don't have a deposit saved but parents will draw out equity to gift me funds and I will be paying them the interest repayments.

If I am gifted the funds for my deposit, are the interest repayments tax deductible? And if so, what do I need to do exactly?

Many thanks in advance.

Dinamo

 

[MRO]

A gift from your parents to you isnt generally deductible or assesable.

However, you are making repayments with interest so this is not a gift, it is a loan. Family arrangements are always difficult but to claim anything you should get formal advice and almost certainly a written loan agreement to formalise the arrangement. This may make the loan interest deductible to you and asseable to your parents.

 

[Paul@PFI]

No. Not ever.

Only gifts to a entity that is endorsed by Govt as a Deductible Gift Recipient are eligible for tax deductions (ABN register shows it). Personal gifts made for love and affection are not.

Likewise the funds given to you for love and affection are not income and not taxed either.

You may be better off having this loan documented (lawyer) so that you can claim interest deductions. However the income may affect parents centrelink etc. It is assessable income to them too.

 

[Dinamo]

Apologies let me clarify - I meant the interest repayments on the loan that I will be paying to my parents.

 

[tobe]

If your buying an investment property with those loaned funds, and receive an assessable income as a result of the purchase (rent), then yes, the interest repayments to your parents are tax deductable.

Make sure everything is at arms length, and at market rates. SO the rent, the interest rate and terms of the loan etc etc.

 

[HomePage]

Apologies let me clarify - I meant the interest repayments on the loan that I will be paying to my parents.

MRO and Paul both address this in their posts.

 

[Dinamo]

Great, thank you everyone! Will have to contact a lawyer.

 

[Paul@PFI]

Great, thank you everyone! Will have to contact a lawyer.

Terry Waugh posts here may assist.

If your parents borrow the $ and onlend to you with no margin then they should have zero tax issues. Their statement is also effectively yours. Just maintain it on a n arm s length basis. This doesn't mean a profit or that they need to take loan security. Most important is regularity in payts.

 

[Brady]

You need to be clear, a gift is exactly that a gift.

Whereas a private loan is different as you have repayments. Both the interest expense by yourself and the income receive by your parents should be declared to the Tax man. Along with your bank.

I have a private loan agreement between my parents, contract was drawn up and witnessed by a JP prior to any funds being transferred. Interest is at market rates.

 

[marg4000]

If a loan, you can claim deductions for interest, BUT your parents must declare the interest as income to the Tax office and/or Centrelink if applicable.
Marg

 

[Terry_w]

Its not a gift iv you are paying interest.whag you n?ed is a properly do umented loan agreement. I spoke to someone this afteroon about this and it may have been you!