Would you buy out your parents home in this scenario?

[Ryan C]

Hey everyone,
I have a situation to decide whether to go ahead with it or not.

We want to protect my dad's house from a new partner he is wanting to bring over from overseas by buying him out and transferring the house in my name.

My two sisters and I will share this our only inheritance eventually.

The house is worth between $300k - $350k with $86k owing on the mortgage.

Buying him out will involve paying about $17k+ in stamp duty, which will come from a loan of about $120k.

My own financial situation without this is that I have an investment property with a $262k owing, property is worth $290-300k.
The rent I receive closely amounts to the monthly payments.
I have a salary between $85-100k. I have no other debts. I am single and have one dependant.

My dad will keep living in the house and says he will continue to pay me $300-400 fortnightly. If I buy the house I want our arrangement done properly with rental agreement, bond etc because I understand this has tax implications.

My mortgage broker friend thinks this is a good opportunity as I could access the equity up to 80% for other investments.

Although I can do this, I'm not completely comfortable with it because the house belongs to my sisters too.

I have no intentions on another residential IP and currently building my index funds share portfolio.

• If you were in my situation would you go ahead with this or not and why?
• Am I taking on too much risk by taking on more debt?
• Anything else you can think off that I should think about in making a decision?

Feel free to add anything you think will help me.

Thanks for taking the time to read and comment.
Ryan.

 

[thatbum]

You're trying to beat the family court? Maybe you should get some family law advice.

 

[Perp]

It seems an awfully risky, expensive, complicated, and potentially fruitless alternative to having your Dad enter into a binding financial agreement.

 

[Ryan C]

You're trying to beat the family court? Maybe you should get some family law advice.

Not at all. It's a long story re dad's relationship however I've spoken to a solicitor regarding this and he's advice is its a common issue / problem he sees,we need to take action (sooner the better) and the option I described is the 'cleanest' way to deal with it.

 

[TMNT]

your dad is boned,

assuming she is from asia, the moment she gets into the country, and unless they get divroced within 20 mins, then he will lose big time,

not sure what else you can do, except sit him down (without her) and explain your concerns and the law

he's older than you, and will have more life experience , so he should be 'smarter' in this respect

good luck

 

[Perp]

It's a long story re dad's relationship

If it's a long story, bear in mind that just because they haven't lived together doesn't mean he isn't already in a de facto relationship under Australian law.

If they've been in a committed monogamous long-distance relationship, and especially if there has been any mingling of finances or support flowing, it may be too late already; she may have enough to establish the existence of a de facto relationship and already be entitled to a share of his assets. As such, any attempt by your Dad to transfer assets now could be a crime (fraud).

Unless the solicitor you saw was a family lawyer, I think you need specialist advice.

 

[sanj]

I don't know the ins and out of family court decisions but I think it's important to consider that your dad will not be protected in the event there's a breakup in a relationship of yours.

Also, you wanting to borrow against a property that your dad has almost paid off and is presumably so we here he wants to live for the rest of his life is fraught with danger. What if you end up having issues and the bank repossesses it?

 

[Perp]

I don't know the ins and out of family court decisions but I think it's important to consider that your dad will not be protected in the event there's a breakup in a relationship of yours.

Yes, good point, that's an important consideration, too!

How much are you going to pay for the house? How are your sisters' interests protected?

 

[Ryan C]

your dad is boned,
assuming she is from asia...
he's older than you, and will have more life experience , so he should be 'smarter' in this respect

Assumptions are correct. We've tried and I doubt it changed his mind. For now she remains in Asia with no progress taken to migrate her here...yet. Hoping it stays that way.

Unless the solicitor you saw was a family lawyer, I think you need specialist advice.

Good point. Thanks for this. Might also find a cheaper solution than paying stamp duty etc.

 

[Cruskits]

Ryan C,

Seems like a lot of mess to protect your individual $80,000 of inheritance and considering if worse came to worse and your father divorced this lady I imagine it would be 50/50 split, your only talking $40,000.

What may seem like the easiest solution now involving a lawyer, a father, 2 sisters and an overseas bride may end up being a disaster that rips relationships and families apart.

The fact you have already mentioned the equity for future purposes even though you say that you would never do this scares me a little.

Golden rule of many people I read on here. Never,NEVER invest with friends or family. For those people that it works for, it is amazing. However, for those that it doesn't work out, the financial gain was never worth as much as the positive relationship lost.

 

[TMNT]

Assumptions are correct. We've tried and I doubt it changed his mind. For now she remains in Asia with no progress taken to migrate her here...yet. Hoping it stays that way.



Good point. Thanks for this. Might also find a cheaper solution than paying stamp duty etc.

unfortunately, its only a matter of time before she gets here,

its riduclously easy to import a girl over, need a bit of money, no serious crime history ,

when your fathers asian darling starts (or has already started) with a sob story about how tough her life and how she needs to leave her country, your dad will cave in very quickly,

can I assume that assuming you are 30 for example, your dad is 60

his little darling is about 30-40, and has already started the sob story

and depending which country she is from, he will be sending a monthly pocket money errrr allowance to her

I dont know what the solution is save from you disconnecting his internet nand/or international phone plan

 

[WattleIdo]

I had one parent who used her head for decision-making and another parent whose brain was located elsewhere. Your dad has made his bed now.
Time for you and your sisters to move on and make your own money. Don't worry about this 'inheritance' - that's his and you can do better anyway.
Use your head

 

[DaveM]

and depending which country she is from, he will be sending a monthly pocket money errrr allowance to her

Well her family does have a sick buffalo that needs medicine...

 

[SK Investments]

I think your father need's specific legal advice (just getting in before Terry_w!)
A pre-nup agreement may still be an option.

 

[Scott No Mates]

Or a lifetimes' supply of export quality goats

 

[WASP]

Are you actually buying it off him, or just paying stamp duty to put the property in your name

 

[Macca]

Not a good situation to be in

I can understand that you want to protect your inheritance as it may also come from your mother as well.

As others have said, while she may love your Dad, she is far more likely to love his money even more. Unfortunately many westerners have found out the hard way, the women know our laws and scheme to get as much as possible.

I agree that she may have already created a defacto relationship by being supported by him even though living OS.

Is your Dad happy with your suggestion, is he actively seeking ways to protect his 3 kids inheritance or are you the instigator ? If your Dad is in agreement, what about your sisters, how do they feel about all this ?

If Dad wants to do a deal I would check on the defacto law, check if he has sent her money regularly, ask a lawyer who knows about this stuff, Terry W would be a good start.

One further comment, if you buy it off him, you need to charge almost market rent or the ATO will be on your tail, check with your accountant.

 

[Ryan C]

In response to all the Asian darling type comments, this woman is a sneaky b**** and has played my dad nicely - a young girl in poverty found a potential way out by preying on a vulnerable man. This is why my sisters and I want to protect what my mum and dad worked hard for when they were together.

Are you actually buying it off him, or just paying stamp duty to put the property in your name

I'd actually be buying from him at the price of the outstanding mortgage owing and associated costs to transfer title to me.

Not a good situation to be in

...

Is your Dad happy with your suggestion, is he actively seeking ways to protect his 3 kids inheritance or are you the instigator ? If your Dad is in agreement, what about your sisters, how do they feel about all this ?

...

One further comment, if you buy it off him, you need to charge almost market rent or the ATO will be on your tail, check with your accountant.

Definitely not. It sucks!
My dad and sisters are supportive in any decision I make because in my family I'm the most knowledgeable about money matters.
Dad wants the least costly option else we just leave the whole thing along in the big mess it is. My sister instigated protecting the house idea but I'm the only one in a financial situation with a willingness to at least consider the options available.
I'm talking to my accountant on Thursday to get his opinion on things.

The fact you have already mentioned the equity for future purposes even though you say that you would never do this scares me a little.

I have to admit this is why I first thought it was a good idea but after considering the risks I quickly had more reasons to not use the equity.
Also, I am a firm believer in not mixing investments and family/friends. I've also lurked enough times on forums to see the disaster it brings. I can't even say why I'm considering it in this case but my gut just doesn't feel right about it this whole thing to be honest. I guess before I say I'm not doing this I just want to be sure that I've explored every possible option available so I don't feel so bad about it later.

 

[Ryan C]

A big THANK YOU for all your comments so far!

 

[JennyK]

Ok I think I understand now.