Loans vs Gifts

It is very common that parents (or other family members) provide their

children with assistance when purchasing their first home. If their child

gets divorced from the person they purchased their home with, the money

that the parents provided could be included in the asset pool (ie, part of it

could be given to their partner) if it is given by way of a gift.

If these monies are advanced to the child as a bona fide loan, the amount

of money that was provided will be sequestered off from the asset pool

and will not be included in the division of assets of the parties.

It is also very common that parents, children (and other parties) assist each

other in this fashion but do not have proper documentation and are not entering

into genuine loans, instead entering into ‘sham loans’ in order to protect their

children in the future. Whether or not these ‘loans’ will be considered

bona fide and not a gift, will depend on the details of the case. It is

advised that you contact our office to obtain personalised advice as to

whether your specific circumstances will be characterised as a loan or a


To arrange an obligation free and free 30-minute consultation, please contact our office on:

(03) 9005 8284


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