What to Do to My Parents' House? Be a Good Son and Help or Forget

Hi Ozbargainers,

I'm in a situation that I think the wisdom of Ozbargainers will be valuable. I'll try to make the story as short as possible. Some years ago, my parents bought our family home. Due to financial difficulties, my father could not afford mortgage repayments. I still lived with them at the time,so I thought as a son, I decided to take on that responsibility. My parents and I came to an verbal agreement that I will get at least 1/2 value of the house if we ever decide to sell it. However, my name is not on the property title.
Fast forward a few more years, I was able to afford my own place and moved out with my partner. Our family home all paid off and my parent's financial was a lot better. Now, presently, we have a family discussion and my parents want to do something with the extra money they have. Since I was the biggest contributor to the house before, they allow me to decide:

  1. Demolish our family house and rebuild with a couple of units (one for them & one for me if I ever want to move back).
  2. Buy another property elsewhere for them to live (with my name on the title this time) and keep the old house (which is still under my parent's names)
  3. Any other options Ozbargainers think is better and wise.

Regardless which options I choose, I want my name in the property title this time. With option 1 & 2, it's possible that I will have to chip in and help them with mortgage repayments again. One other problem is that stamp duty. Do I have to pay stamp duty if I decide to go with option 1 and ask my parents to put my name in the land title? Is there any way to minimise stamp duty? I live in Victoria.

Thanks in advance and apologies if this is too long & confuse to read.

Poll Options

  • 12
    1. Fire in the hole - Destroy and rebuild
  • 3
    2. Search and buy new paradise elsewhere
  • 1
    3. Forget and move on (nothing concerns me anymore)
  • 3
    4. Others

Comments

  • Any siblings?

      • You'll want all your contributions documented. I'm sure that some siblings can be understanding but when spouses come into the picture, there will be disputes over small discrepancies and further misunderstanding snowballs.

        Just have a stat dec with your parents to say you contributed so and so amount, equivalent to how many % of the value of the building, hence in a will, your % ownership of the property will be treated as a separate estate. Of course, this is not airtight but amongst understanding family members, it serves it's function.

        If your siblings are not to be trusted, I'd want everything airtight. This involves including your name in the existing title even if it incurs stamp duty. Until your name is in the title, it's all debatable.

        And if you can't trust your parents, ignore all the above. Life is sad.

  • number of siblings?

  • Any siblings + do you trust your parents?

    • 2, yes I do trust my parent.

      • If they are happy staying where they are at the moment, you can actually ask if they can give the extra money to you, and treat it like you gave them interest free loan for the past few years. You own less/none of the old house anymore, they are free to do whatever they feel like, and you have some cash for your new investment, probably get a new property.

  • How old are your parents?
    Would rebuilding put them back in debt?
    Why mess with the property at all?
    If they have too much money (and giving some to me is not an option) then why not leverage the equity in the family home and you both go halves in a couple of investment units? Your parents wont have to move and you get you're name on the title easy-peasy.

    I suspect you will get slugged with stamp duty (this was one of the taxes they 'promised' to repeal but didn't when the GST was implemented).

    "I live in Victoria."

    You poor bugger. In that case go with option 2 "Search and buy new paradise elsewhere" :)

    There are tons of things you can do, but I'm not seeing the necessity of anything from what you posted. Have a chat to a solicitor about your parents title. It 'may' be that you could buy a small percentage of the home, still have your name on the title but pay minimum tax. But conveyancing solicitor or accountant should be able to give you a better answer.

    • My parents are near retirement age. The bank probably won't lend them any more money. Our family home is pretty old but fortunately we own a big land block which can be subdivide and build 2 decent size houses/units. The location for our family home is also pretty good. But you're right, I don't really want to touch that house. I suspect troubles I have to go through to get it under my name is not worth in the end. But I might pay my conveyancer a visit this weekend.

  • If you have your name on the next property be it Option 1 or 2, it has tax implications for you.

    I gather your current home will remain your PPOR but the property from Options 1 and 2 will become an investment asset subject to CGT, even state level money grabs like Land Tax.

    Furthermore, if your name is on another asset and your GF and yourself are cohabitating, should the worse happen, you may lose half of the value of that asset.

  • Hats off for helping out like you did, family is so important for so many reasons.

    As others have alluded too, if you have siblings you should I would try and lock down something into your name exclusively, saves for dramas in the future.

    Never been a fan of knocking down a perfectly good asset.

    Buy an investment property elsewhere in your name and have them help out with the payments.

    • Thanks Cypher67. My siblings are alright. They understand that I have the biggest share in the family home. But like you said, I also have my own family to look after and it's also easier to deal with the bank if you have something in possession.

  • Possible Option 3 - remortgage the home and have your parents repay you the money you put in plus Interest, then they pay down the mortgage as usual.

    • Haha, I have to tread very carefully here. They're still useful to pick up/look after my kids in the future.

      • Wasn't actually a joke..
        End result is the same if you were to go with Option 1 or 2…
        They're back paying a mortgage, either way.
        With option 2 they're back paying a mortgage that is yours, not theirs..

        • I know what you mean. Problem is they're sick of the old place and want an "upgrade".

  • Any bargains siblings??

  • Why can't you buid small little duplex type properties, one or two bedroom properties to sell off (I don't know the size of the land so this could be impossible)