With property prices expected to continue rising in 2026, many parents are looking to step in to help their children in getting a leg up for their first property. Here is a quick guide to the three most common ways families give this support and what you should consider before deciding.
Option 1: Selling or gifting property to your children
Transferring property (even at a discount) may trigger Capital Gains Tax, calculated on the market value at the time of transfer. Transfer duty is also assessed on the higher of the sale price or market value.
Both parties should engage separate solicitors to prepare the contract of sale or gift deed and complete the title transfer.
If you receive a pension or aged care support, transferring assets may affect means-testing, so obtain financial advice before proceeding.
Option 2: Lending money to your children
If you prefer to provide funds as a loan, clearly document repayment amounts, interest and timing. Consider how the loan should be treated by your estate if you pass away—will it be forgiven, repaid, or deducted from that child’s inheritance?
You may choose to secure the loan with a mortgage. Be aware that this can affect your child’s future borrowing power and lender assessments.
Option 3: Going Guarantor
If you act as guarantor, the bank may require you to cover the loan if your child defaults and may take security over your property. You will also need independent legal advice, which remains mandatory in most cases.
Helping your children can be rewarding, but each option carries risks. Seek legal and financial advice before committing.
Give our experienced team at McNamara a call on 1300 285 888.
