Have you considered gifting a property to your children?

In your quieter reflective moments, the thought may cross your mind about buying or giving property now to your children, or even skipping a generation and buying property now directly in the name of your grandchildren. will testament legal power of attorney death taxes estate plan law

If this is you, lay down immediately until the feeling passes.

Seriously though, isn’t it better to give now with a warm hand rather than a cold hand.

Why not leave all of these assets you are acquiring as a very successful property investor to your children or grandchildren while you are alive.

Doesn’t this notion appeal to you more than passing it to them in your Will decades down the track.

Well, that might have all of the appearances of a good idea, but let me explain to you why it is not.

The Fundamentals

To dispel any doubts you may have about this issue, let me assure you that it is legal to buy a property in a minor’s name (someone under the age of 18).

The Titles Office simply notes on the Title Deed that the owner of the property is for example “London Glenister, a minor born on 5 March 2010.” 


When London Glenister turns 18, all you need to do is produce a birth certificate to the Titles Office, together with evidence that she is still alive, and they will simply register a Departmental Dealing over the property and remove the words “a minor born on 5 March 2010.”

To her in 2028, this will be just like winning the Lotto. 

No stamp duty, GST or capital gains tax payable at all.


But the downside is that this property cannot be sold, mortgaged or dealt with in any way until this child reaches the age of 18 without a Court’s approval (an expensive process and unlikely to succeed).

For those of us who have had a few runs around the block and raised children, you will know all too well that when this kid turns 18 she is more than likely to unleash her new financial power by spending on alcohol, designer clothes and a new car.

So, you’ll soon realise that this wasn’t such a bright idea after all

What if you come up with a bright idea and say to yourself “Ok, I will buy the property in my name as Trustee for this child.”

This trust arrangement could be set up so that you could provide in writing that instead of the property vesting in her at the tender age of 18, she receives it at the more respectable age of 21 when at least she might spend the money on overseas travel.

You comfort yourself with the thought that “I can still deal with the property without getting a Court’s approval because I control the property as her Trustee.”

You ring your family solicitor and he asks “Did you know though, that when your girl turns 21 you will have to pay the full rate of stamp duty (based on the property value in 21 years time) to transfer it into her name solely.”legal law

“And I bet”, he says “The ATO puts their hand out for tax on the capital gain on the property over the last 21 years.”

You sleep on the solicitors comments overnight and next day you ring your Accountant for a second opinion on the capital gains tax issue (because everyone knows that Accountants are a lot smarter at tax that Solicitors).

She comes up with the brainwave that your idea about buying and holding the property for 21 years is a good one but suggests that you finesse it by simply appointing a new trustee of the property in place of yourself when London Glenister turns 21.

The new Trustee can be a company in which she is the sole Director and Shareholder.

Presto, the problem is solved.

You have now transferred not ownership, but control in this property to an entity, namely a new company controlled by your precious girl without attracting any stamp duty, GST or Capital Gains Tax and the reason is that there has been no change in the beneficial ownership of the property.

The property is still held or owned for the benefit of your princess.Will

It is just that there is now a new Trustee in control of the property.

Not quite as good as transferring it totally into her name.

But think of it this way, you have taught her about asset protection at a very early age.

That is, own nothing but control everything through a company/trust structure.

Setting her up at 21 years of age with a property that she does not own, but controls still makes her a wealthy woman but puts a firewall between her and those greedy people wanting to “have a go”.


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Rob Balanda


Rob is a partner in the Gold Coast based law firm MBA Lawyers. He is a highly regarded educator of property investors and estate agents and the author of the "Made Simple" series of books and CD's.
Visit www.ClausesMadeSimple.com

'Have you considered gifting a property to your children?' have 10 comments

  1. Avatar

    April 4, 2019 kim

    Hi Michael. I was wondering if you could lead me in the right direction. My Mother and I purchased a block of land a few years back. We put the land in her name at the time. We now want to add my name to the title or put my name Completely on the title. At the time we purchased the land. I was going through a separation. I did not want to leave myself open to my ex partner turning nasty and trying to take ownership of the land. I understand there is a law where if I agree to take care of my Mother and provide a place for her to live. The transfer of title can be dramatically reduced in $. I am really lost and I have been trying to find any information I can. My Mum is 74. I think I have to pay a GST. My other 2 siblings are aware that I own the land so there is no issue there. I also qualify for First home buyers assistance, however, just for land. Not sure what track I go down. Thanks so much


    • Michael Yardney

      April 5, 2019 Michael Yardney

      I’m not aware of the “law” you are talking about – you may have to ask a solicitor or your accountant


  2. Avatar

    February 28, 2018 Carlos

    The only problem with the ‘solution’ you have proposed is that the daughter loses any tax relief if she decides to live in the property. Because the property is owned by a trust, she’ll have to pay annual land tax (in Victoria, about $11.5K on a $2.1M property) and CGT when she sells. If the property was in her name no tax would apply.


    • Michael Yardney

      February 28, 2018 Michael Yardney

      Yes – there are always pros and cons


      • Avatar

        April 29, 2018 Anna

        Hi Rob, thanks for this advice, very clever. Could same thing be done if child was say 30 yrs old? My sister and I are looking to develop into 4 townhouses, our ex family home we inherited as tenants in common. My sister wants to somehow transfer two townhouses (when built) to her two children now aged 27 and 30 respectively. If she sells them to the kids, she is up for a huge cgt liability, and they would have to pay stamp duty on acquring them. How can she do it? She has to borrow $700,000 to build the two townhouses and she wants the kids to pay these loans off as they both have full time jobs. It is a way for them to achieve home ownership, by paying half price for a property that will potentially have a mkt value of $750,000 each. Thanks


        • Michael Yardney

          April 30, 2018 Michael Yardney

          Anna – there are some very significant tax implications here – this is not as simple as you think, but some planning will help you legally minimise your tax.

          You really should catch up with a property tax specialist – why now organise a time to meet up with Ken Raiss by clicking here


  3. Avatar

    February 1, 2017 Roger

    I clicked on the link to your book Rob and was sent to a page by Shannon Davis ?


  4. Avatar

    January 27, 2017 Christopher Howes

    …Control ALL and own NOTHING…This world is full of greedy money grabbing “no goods” …A company as the Trustee of a Trust and you as the Director in the driving seat provides protection from all the free loaders’ that cross your path…..!!!


  5. Avatar

    December 8, 2015 Yuga

    Thanks Rob for sharing. If I understood it correct, the idea is to purchase the property in the name of a trust to start with and then by re-appointing your kid as the new trustee of the trust.
    What if the property was already purchased in individual names (e.g. tenants in common)? what would be the most cost-effective way of transferring the asset to your kid?


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