Thought of 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. gifting property

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 realise that this wasn’t such a bright idea after all.

But you start thinking about it again.

You 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. Businessman showing a document

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.”

“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.  house property

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

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.

'Thought of gifting a property to your children?' have 8 comments

  1. Avatar

    February 1, 2015 em

    Interesting and helpful, thanks Rob. I have a child with mental health issues and am therefore reluctant to leave property directly. I imagine there would be tax implications and also increased accountant fees associated with a company structure that, over a couple of decades might be much the same as establishing a Trustee on my death. Any effective options given property is already in sole ownership?


    • Michael Yardney

      February 1, 2015 Michael Yardney

      Most sophisticated investors own their assets in trust structures. There are ways to change ownership structures of properties you already own,but this may trigger CGT and stamp duty, so it’s worth discussing with your accountant


  2. Avatar

    July 24, 2013 Splunkzop

    We have 3 kids. The eldest is a loser and I don’t want her to inherit anything when I die. The second is OK, just self absorbed, and I don’t mind putting her in the will. The third is a gem and I’d help her out by gifting one of my properties to her in the next few years (she’s 20 now) and have her in the will as well. How’s that for a situation?


  3. Avatar

    July 24, 2013 Mike Baker

    Couldn’t you just set up the trust with a corporate trustee right now, and later you resign as sole director and appoint her as sole director of the trustee company?


    • Avatar

      July 25, 2013 Rob Balanda

      Mike, yes that would work too, as long as you don’t want to have a brand new company as Trustee………Rob BALANDA


      • Avatar

        October 30, 2014 neel

        the child could not be the sole corporate trustee director as well as the sole beneficary of the trust because then the trustee beneficiary interests would merge and the trust would cease to exist but this could happen with her parent or someone else continuing as a an additional corporate trustee director infact perhaps the sole director can continue to be the parents as before additionally the trust may be setup as a protected or capital reserved trust with the child entitled to the income of the asset and the corpus on vesting date that way the beneficiary cannot demand the trust to close and take the corpus until vesting date which may be set for when the child is more mature this also allows protection against common law spouses and live in partners and divorces or separation since the trusts property will not fall under matrimonial property for division the only downside of this structure maybe that CGT may apply if the beneficiary is not living in that house for main residence exemption or in the case of multiple beneficiaries – all of them must use the house as main residence for CGT exemption the other thing was land tax and I am unsure but I think it may also be exempted of the beneficiary used the house for principal residence
        i am not an accountant or lawyer but i am actually researching a suitable structure to use myself so please disregard my comment and consult an accountant ot lawyer


        • Michael Yardney

          October 30, 2014 Michael Yardney


          Please take this the correct way…as you say you are not a lawyer and I think you have interpreted your readings incorrectly
          You will find Rob’s advice correct.


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