Before gifting a house deposit, consider an asset protection strategy
Parents helping their children into the property market often focus on the deposit, but documenting the advance as a formal loan rather than a gift may provide greater long-term asset protection if circumstances change.
A formal loan agreement may help establish that parental funds remain a liability rather than an outright gift, which can be an important consideration if property ownership or family circumstances change. (Image source: PeopleImages/Shutterstock.com)
One of the most rewarding things parents can do is help their children enter the property market.
For some families, that assistance comes in the form of a home deposit or contribution towards the purchase price.
What many parents do not realise is that how the funds are advanced can have significant long-term consequences.
In our tax planning work, we regularly recommend that families consider establishing a formal discretionary loan agreemen…
