Buying property while awaiting 804 visa

[Duchess]

Can anyone advise of pitfalls of buying a home in our children’s names to avoid foreign land transfer surcharge? Both children are Australian citizens with their own homes and my husband and I are on bridging visa A whilst awaiting 804 aged parent visa (queued since April 2019). Thank you in advance

[Marisawright]

1 hour ago, Duchess said:

Can anyone advise of pitfalls of buying a home in our children’s names to avoid foreign land transfer surcharge? Both children are Australian citizens with their own homes and my husband and I are on bridging visa A whilst awaiting 804 aged parent visa (queued since April 2019). Thank you in advance

Depending how you structure it, there will be tax implications for your children.  Are you going to gift the money to your children to buy the home?   Or lend it to them?  Will it be enough to buy the property outright or will there be a mortgage?   

The property will be their investment property, so eventually when they sell, there will be capital gains tax to pay.

The other pitfall, which no one wants to consider but must be mentioned, depends on how much you trust your children.  Unless you set up a legally binding agreement of some kind, you will have no rights to the home at all, or any way of claiming back the money if the house is sold, or if you need money to pay for aged care for instance.  If there is a falling-out, your children could evict you and sell the house, and the money would be 100% theirs by law.

It's something no parent would believe could ever happen, but I know of two cases where it did happen. In one case, the parents trusted their daughter completely, but sadly the daughter passed away and their daughter's partner inherited the house.  He resented the parents who he felt were "sitting on a goldmine", and sold the house.  The parents now live in a friend's one-bedroom 'granny flat'. 

Edited July 20, 2023 by Marisawright

[Duchess]

Thank you so much for your insightful advice. We are unsure whether to gift the money or loan it. There would be no mortgage as we will be using savings from the UK.

Of course we trust our children but one never knows what the future might bring so thank you for your words of caution. I really appreciate your response.

best wishes

Duchess

[rammygirl]

If you are happy to build the tax on the land will be less. Each state is different with the extra taxes. 
I would get advice before buying in someone else’s name. There could be downsides for both parties. 

[Tulip1]

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Edited July 20, 2023 by Tulip1

[Marisawright]

11 hours ago, rammygirl said:

If you are happy to build the tax on the land will be less. Each state is different with the extra taxes. 
I would get advice before buying in someone else’s name. There could be downsides for both parties. 

I think the main concern is the FIRB surcharge which is the same everywhere and I don't think there's any reduction for building.

[rammygirl]

Yes but there are additional stamp duty charges as a percentage of the transfer. (Depending on state) On land that is going to be less than a completed residence.