Selling an empty nest to help our daughter buy

AT THE end of 2018 we wish to sell our home to live with our daughter, who will be purchasing her first home.

We will have $300,000 from the sale and plan to gift her $250,000 towards her mortgage. Can you tell us how to go about this transition without any legal or financial issues? We are both on a Centrelink pension.

We have no other savings – all we will have left is $50,000 from the sale.

Will my daughter have to pay gift tax or should we buy into her mortgage?

Once you sell the property you will become a nonhomeowner and be able to have $583,500 in assessable assets before you are affected under the assets test. The $250,000 will be held as a deprived asset for five years from the date of the gift, but you are allowed to forgive $10,000 each year with a maximum of $30,000 over five years.

Under the deeming rules this could result in the minimum reduction in your pension for the first couple of years but this should not make a massive change to your circumstances.

There is no gift tax in Australia, and I see no point in complicating things by taking a share in the mortgage unless you are trying to protect her from a future relationship breakdown. Another option may be to investigate granny flat rights, but in view of the relatively small amount of assets you have, I doubt if it would be worth it. LABOR’S latest proposals focus on the money the government would earn by cancelling cash refunds for franking credits. They neglected to tell the public that these credits are added to income and tax calculated on that total before tax is collected and refunds paid.

My actual income is only about $35,000 a year, but with imputation credits it jumps to just over $50,000 and tax is calculated on that amount.

This system means I cannot even qualify for the Commonwealth Seniors Health Card. The cash refund varies but is helpful to all of us low-income earners.

Will these tax credits still be added on to actual income under the proposed plan, and tax calculated and charged on the total? This would be extremely unfair. One would hope that the whole system would be carefully reviewed and revised.

The Labor proposal is to prevent a taxpayer getting a refund of excess imputation credits if their tax payable is zero. This would not change the existing system where imputation credits are added to taxable income and then an allowance made for any imputation credits the investor received.

You mentioned the CSHC: Keep in mind that the cut-off point for a single is $53,799 a year. It may be possible to tweak your affairs to make sure your adjustable taxable income does not exceed that figure.

There is no gift tax in Australia, and I see no point in complicating things by taking a share in the mortgage