Rules around gifts

[coolcup69]

Hi there

My parents have recently separated. They currently jointly own their home. My father is willing to forego his interest in the home to my mum. Due to the complicated personal situation it is important that my mother protects her assets and as such she would like to transfer the home to my name so I can look after her and it gives her peace of mind that no one else can make a claim on the asset. I could think of a couple of ways to do this:

Method 1
Step 1: Dad transfers his share of the house to my mum for nil consideration
Step 2: My mum then gifts the house to me

or
Method 2
Step 1: My parents gift the house to me

Under method 1, is the following correct for my mum?
- my mum pays stamp duty on step 1
- my mum does not pay CGT as the house is a PPOR
- my dad gets no money and has no future claim on mum

Under both methods, I am unclear as to the impact on me:
- do I pay any taxes or duties as a result of the gift?
- what is my cost base for the gift under a future CGT event? I assume I can get a valuation done today to support the cost base?
- are there any other things I should be worried about?

Or is method 3 (below) a lot cleaner?
Step 1: Dad transfers his share of the house to my mum for nil consideration
Step 2: I buy the property off Mum based on an independent valuation

Under method 3, I definitely pay stamp duty. Just wanted to see if I can structure the transfer a different way to minimise duties payable as this is really just to give Mum peace of mind.

Many thanks in advance for the help.

 

[marg4000]

This will require legal advice to both you and your mum.

In your mum's case, it will be taken into account if she applies to Centrelink in the next 5 years.

In your case, it will have an impact in any future relationship you may have. No matter how you structure it, if you have a family and the relationship breaks down then this asset will be taken into account in a property settlement.

Once the asset is in your name then you own it and you mother has no claim on it. This is definitely NOT in her best long-term interests.

And unless you are an only child, sibling issues may arise.
Marg

 

[HD_ACE]

Thats all very well but whats stopping anyone else making a claim against you for the asset?

Think about your profession
your relationship status
your investments (landlord insurance?)
your hobbies
etc etc etc

might be more at risk in your name then hers.

cheers

 

[Colin Rice]

Transfer the property to your Mums name would provide the best protection for her.

Seek legal advice as well.

 

[Terry_w]

Hi there

My parents have recently separated. They currently jointly own their home. My father is willing to forego his interest in the home to my mum. Due to the complicated personal situation it is important that my mother protects her assets and as such she would like to transfer the home to my name so I can look after her and it gives her peace of mind that no one else can make a claim on the asset.

Many people could still make a claim on the house
1. Creditors if you go bankrupt
2. Creditors of your mum
3. creditors of your dad
4. current or future spouses of yourself
5. Possibly future spouses of your mum
6. Family provision claim on the death of yourself or your mum
etc

I could think of a couple of ways to do this:

Method 1
Step 1: Dad transfers his share of the house to my mum for nil consideration
Step 2: My mum then gifts the house to me

What about stamp duty? Transfer for mum to you = full duty at market value.

Method 2
Step 1: My parents gift the house to me

Stamp duty at market value - payable by you.

Under method 1, is the following correct for my mum?
- my mum pays stamp duty on step 1
- my mum does not pay CGT as the house is a PPOR
- my dad gets no money and has no future claim on mum

Mum possibly exempt from stamp duty because of breakdown in relationship.

Under both methods, I am unclear as to the impact on me:
- do I pay any taxes or duties as a result of the gift?
- what is my cost base for the gift under a future CGT event? I assume I can get a valuation done today to support the cost base?
- are there any other things I should be worried about?

No gift taxes, but stamp duty applies. CGT at market rates.
Be worried about what I wrote up above. No consideration = claw back provisions of bankruptcy act etc Fine if nobody goes bankrupt though.

Or is method 3 (below) a lot cleaner?
Step 1: Dad transfers his share of the house to my mum for nil consideration
Step 2: I buy the property off Mum based on an independent valuation

Under method 3, I definitely pay stamp duty. Just wanted to see if I can structure the transfer a different way to minimise duties payable as this is really just to give Mum peace of mind.

Many thanks in advance for the help.

What about s68 (from memory) of the duties act. A property may be able to be transferred to a child, if the parents break up, with no stamp duty - not sure off the top of my head if this applies to adult children.

If you are a minor then there may be other tax benefits to consider.

 

[coolcup69]

Thanks very much. There is much food for thought here, but I appreciate the feedback and pointers. As usual very productive insights from everyone!

 

[kathryn d]

How old is your mum?
Is there a reason she cannot look after herself?

Did she ask you to care for her, or did you offer?

 

[Terry_w]

Also consider the social security act issues surrounding gifting - could affect payemnts.

 

[coolcup69]

How old is your mum?
Is there a reason she cannot look after herself?

Did she ask you to care for her, or did you offer?

My mum is 60. She can look after herself (physically) but I will be supporting her financially as she was reliant on my Dad. In my culture, help is not really asked for or offered in family, it is just assumed.

Can I ask why this is relevant?

 

[kathryn d]

My mum is 60. She can look after herself (physically) but I will be supporting her financially as she was reliant on my Dad. In my culture, help is not really asked for or offered in family, it is just assumed.

Can I ask why this is relevant?

The age of your mum is very relevent.
As a woman of 53, I certainly wouldn't be signing over my property to any of my children in 7 years. I was curious why she is so willing.

So instead of her husband giving her an allowance,her child will be.

 

[marg4000]

My mum is 60. She can look after herself (physically) but I will be supporting her financially as she was reliant on my Dad. In my culture, help is not really asked for or offered in family, it is just assumed.

Can I ask why this is relevant?

If your mum is gifting you a house, I am concerned that you see yourself "supporting her financially".

Seems to be the other way around.
Marg

 

[AlmostBob]

this would be part of the reason why dad got the boot

Were I to propose " Gift me the house & I will give an allowance " people would be justified in suspecting my motive.
Were anybody else to propose " Gift me the house & I will give an allowance " people should suspect their motive.
Were the OP to propose " Gift me the house & I will give an allowance " people should suspect their motive.
60 <> incompetent
mum <> incompetent
son <> competent
gift sale transfer et al, does not protect the property or the mother from any valid claim

mummy giving you property valued at $astronomincal, then you giving her $pittance/week, is not YOU supporting HER

If it is cultural, so was chopping off the head of your parents with an axe, when they were too old to rape and pillage any more
Catch up with reality, the culture of all incompetent women folk, should be long dead.

 

[Paul@PFI]

Question : Who is mum worried about losing the home to ? Dad ?? If he agrees to settle the whole property under martial breakdown how will he have a further claim ?

If I were mum I would think her child is far greater risk than her former spouse.

What did her lawyer say ?