Property Deposit Question

H

Harro

Our daughter has selected a Torrens Title villa she wishes to purchase.
Price $300k. Is it possible to not pay deposit, $30k and pay full amount at settlement?
She has money in term deposit and does not wish to break it prior to maturity which is in 35 days time. Otherwise, we will need to supply the deposit.
Would prefer for her to stand on her own two feet.
 
Harro said:
Our daughter has selected a Torrens Title villa she wishes to purchase.
Price $300k. Is it possible to not pay deposit, $30k and pay full amount at settlement?
She has money in term deposit and does not wish to break it prior to maturity which is in 35 days time. Otherwise, we will need to supply the deposit.
Would prefer for her to stand on her own two feet.
Click to expand...

Possible yes if agreed however as a vendor would you accept an offer without any deposit being held? The vendor would be strongly advised not to accept it though.
 
Ive borrowed heaps of times off my parents,

if its for a mere 35 days, and you trust your kid paying you, then go for it,

not much of a lesson to teach your kid to lend them something you are guaranteed to get back in 35 days
 
Big Will said:
Possible yes if agreed however as a vendor would you accept an offer without any deposit being held? The vendor would be strongly advised not to accept it though.
Click to expand...

Thanks big Will.
Looks like we will be off to the bank, to assist with the deposit.
I think a carton of nice Reds should suffice as out interest payment!
 
Harro said:
Price $300k. Is it possible to not pay deposit, $30k and pay full amount at settlement?
She has money in term deposit and does not wish to break it prior to maturity which is in 35 days time. Otherwise, we will need to supply the deposit.
Would prefer for her to stand on her own two feet.
Click to expand...

She could buy a Deposit Bond (DB) for a few hundred $'s. Ask your broker to arrange it. Most contracts allow for the use of a DB.
 
Terry_w said:
Seek legal advice on the loan to your daughter and the tax aspects - if it will be an investment.
Click to expand...

Hi Terry,
We will simply be giving our daughter $30k for just over a month. We initially just wanted her to experience doing the entire purchase on her own, to bolster up her achievement.
 
Propertunity said:
She could buy a Deposit Bond (DB) for a few hundred $'s. Ask your broker to arrange it. Most contracts allow for the use of a DB.
Click to expand...

Thanks Propertunity.
We will store this for future reference. Her solicitor did mention it, but thought it might be more cost effective for her to ask Mum & Dad.
 
Harro said:
Hi Terry,
We will simply be giving our daughter $30k for just over a month. We initially just wanted her to experience doing the entire purchase on her own, to bolster up her achievement.
Click to expand...

A lot can happen in a month and tax deductibility could also be lost on this $30k
 
Offer them a $5,000 deposit or some other nominal amount. Tell the agent she's a first home buyer and she's using a parental guarantee loan against your home. As a result she's only got negligible cash now, but full funding will be available at settlement.

Agents don't expect first home buyers to have a large deposit, often they don't have any at all, so the story stacks up with the agents expectations.
 
Peter_Tersteeg said:
Offer them a $5,000 deposit or some other nominal amount. Tell the agent she's a first home buyer and she's using a parental guarantee loan against your home. As a result she's only got negligible cash now, but full funding will be available at settlement.

Agents don't expect first home buyers to have a large deposit, often they don't have any at all, so the story stacks up with the agents expectations.
Click to expand...

Thanks for that Peter. We will be discussing all options with our daughter tomorrow afternoon. Although in the end we feel it will depend on the vendors wishes. Which we believe is only fair.
 
The vendor is prepared to accept a 5% deposit. She does not require our daughter's deposit to assist her with her next purchase as she is still in the research stage. $15k is do-able without breaking term deposit, so all good.
 
Terry_w said:
Seek legal advice on the loan to your daughter and the tax aspects - if it will be an investment.
Click to expand...

I sincerely hope there would be no tax implications on temporarily lending money to a family member??

I mean seriously, how could this in any way be taxed or have a tax impact?

If my parents gave me say $50K for a year to do whatever I please, and in a year's time I give it back to them, I can't see why or how this should affect anything. All that should matter is the income that is earned on the money and that it is taxed appropriately.

I can see this possibly being an issue in the case of say very wealthy people gifting significant amounts and allowing family (or friends) to earn interest (say) without incurring the significant marginal tax that would be otherwise applied if they had invested it themselves.

But in your everday mum and dad case of helping a family member out, I would be pretty much shocked if there were any tax implications.

Very curious to know if there are though!
 
Lesson in life...If you break a contract (TD) expect a cost. She knew the TD has 35days to run when she bid. As an adult she just learned that her choice to do that has a cost. Her choice to break it or walk away.

That said I would prob lend her the $$ after teaching life's lesson. No deduction...A private short term funding deal.
 
BLTN said:
I sincerely hope there would be no tax implications on temporarily lending money to a family member??

I mean seriously, how could this in any way be taxed or have a tax impact?

If my parents gave me say $50K for a year to do whatever I please, and in a year's time I give it back to them, I can't see why or how this should affect anything. All that should matter is the income that is earned on the money and that it is taxed appropriately.

I can see this possibly being an issue in the case of say very wealthy people gifting significant amounts and allowing family (or friends) to earn interest (say) without incurring the significant marginal tax that would be otherwise applied if they had invested it themselves.

But in your everday mum and dad case of helping a family member out, I would be pretty much shocked if there were any tax implications.

Very curious to know if there are though!
Click to expand...

Yes there could be, especially if it is an investment property now or in the future.

e.g $100,000 pp
$80,000 loan with ANZ
$20,000 loan with mum

If there is a written loan agreement with mum then it may be possible to later apply for an increase with ANZ and borrow another $20k and pay out mum. Interest on the $100k could thereby be deductible instead of $80,000

other legal issues relate to:
Death
divorce
incapacity
bankruptcy
of either the lender or the borrower.

Unlikely to happen in 30 days but possible and then it could cost a lot to fix.
 
You must log in or register to reply here.

Similar threads

D
Silly Paranoid Question.
Replies
6
Views
1K
DealSeeker
D
M
Ex partner won't pay mortgage or sign over control of property help
Replies
9
Views
3K
Tigger
T
M
What happens if vendor makes a mistake on the amount to be paid on day of settlement?
Replies
13
Views
2K
miss green eyes
M
T
Selling half of property to wife
Replies
1
Views
1K
Terry_w
Terry_w
O
Partner and I splitting have shared house.
2 3
Replies
54
Views
7K
fernfurn
F
Back
Top