Tax implications ? sale of overseas property

Hi everybody

My parents are selling an investment property overseas and providing me with a cash gift.

They will pay capital gains tax on the sale of the property overseas (approximately 20.6 %) and will send the cash to me in Australia via electronic transfer. I anticipate stashing the cash by offsetting our PPOR loan.


My question is will I be liable for any tax in Australia on account of my parents gifting me the cash? I have never owned that property nor have I ever received any rental income from it.

Thank you all for your help.
 
No taxes on gifts in Australia.

But you should consider whether this is a good idea or not.

Hi Terry

What should I consider whether is a good idea or not?

The cash gift being put aside offsetting our PPOR loan? We anticipate drawing down on that cash through debt recycling to buy more investment properties.
 
Consider asset protection upon bankruptcy and divorce.

Tax strategies, estate planning strategies, asset protection tied in too.

Debt recycling involved borrowing money to invest rather than using cash.
 
Consider asset protection upon bankruptcy and divorce.

Tax strategies, estate planning strategies, asset protection tied in too.

Debt recycling involved borrowing money to invest rather than using cash.

Hi Terry

Thank you for your reply. The monies involved are not huge (approx $200K). Agree with using borrowed money before using own cash. However, there might not be enough equity to pull from our existing IP.

What sort of tax strategies and asset protection should I be thinking about?
 
What sort of tax strategies and asset protection should I be thinking about?

Asset protection upon bankruptcy and divorce. You could reduce the chances of you losing the money by borrowing it from your parents with the parents having a mortgage over your property, behind the banks, to make them secured creditors. This could be at nil interest. If they are in a foreign jurisdiction this has to be tied in, but the agreement can be based on australian laws.

They can then set up a will incorporating a discretionary testamentary trust. When one parent or both die your loan will be passed to the trustee of the trust - which you may control.

If the loan is at interest there are tax strategies involving you claiming interest at say 47% and a parent paying tax at say 30%, or even 0% depending on the situation and location. Once the loan passes to a discretionary testamentary trust there are added benefits in that children can be taxed at adult rates and each kid could get around $20k pa tax free income from the trust.

$200,000 x 10% = $20k pa.

Imagine if you could claim $20k pa and the income gets diverted to a child who pays no tax. And not to lose the $200k if you were to later become bankrupt or divorced.
 
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