How to Legally Buy Property for a Child or Family Member in Victoria

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How to Legally Buy Property for a Child or Family Member in Victoria

Helping your children or family members get into the property market is a generous and increasingly common goal, but doing it wrong can trigger unexpected stamp duty, tax problems, and even future legal disputes.

As explained by David Dawn, Licensed Conveyancer at Victorian Property Settlements, there are several legal ways to buy property for someone else in Victoria, but each comes with important rules and responsibilities.

Option 1: Buying in Their Name, Using Your Funds

This is the simplest option. You gift or lend the money, and they appear on the title.

If it is a gift:

  • There are no repayment obligations

  • May affect your Centrelink entitlements (subject to gifting limits)

  • You may lose control of the funds if relationships change

If it is a loan:

  • Must be documented with a formal loan agreement

  • Repayment terms should be clear

  • Helps protect the contribution if the child later separates from a partner

Tip: If you are contributing significant funds, consider registering a mortgage to protect your interest, even if you do not intend to enforce it.

Option 2: Buying the Property Yourself, Then Gifting It Later

Some parents buy the property outright in their name, intending to transfer it later to the child. This approach seems straightforward, but creates major tax traps.

  • A later transfer is treated as a sale at market value

  • Stamp duty is assessed again (even if no money changes hands)

  • May trigger capital gains tax if the property has increased in value

Result: You could pay duty and tax twice.

Option 3: Buying as Tenants in Common

You and your child can buy the property together as tenants in common, each holding a defined percentage (e.g. 80/20, 50/50).

  • You both appear on title

  • You share ownership in legal proportion

  • If your child receives a first home buyer duty exemption, it is calculated on their share only

Risk: You may still be liable for loan repayments or property costs, and your share could be affected by disputes or future claims from your child’s partner.

Option 4: Using a Nominee or Trust Structure

You may be listed on the contract “as nominee” or set up a family trust to hold the property for a child or relative. These structures can work, but come with strict conditions:

  • The nominee must be declared at the time of signing, or duty will apply again

  • Trusts may create land tax liabilities

  • May affect eligibility for first home buyer or PPR (principal place of residence) concessions

Warning: Nominee structures can be legally complex. They must be set up before the contract is signed, not added after.

Option 5: Acting as Guarantor (Not Purchaser)

You may not need to buy the property at all—simply act as a guarantor on the child’s loan. This lets them purchase in their name, while you provide security (usually equity in your home).

  • You do not appear on the title

  • You are liable only if they default

  • You can limit your guarantee amount with the lender

This approach avoids the tax issues of co-ownership but still requires legal and financial advice.

Can You Protect the Contribution in Case of Divorce?

Yes—but only with proper structuring.

  • Loans should be documented

  • Consider caveats or mortgages if you want the money returned

  • Family law courts can still override contributions unless clearly documented

A financial agreement under the Family Law Act 1975 may also help, but must be prepared by a solicitor.

What About Centrelink?

If you gift more than $10,000 in a financial year (or $30,000 over five years), Centrelink may treat it as a deprived asset. This could reduce your age pension or benefits.

Buying in your own name might protect entitlements in the short term, but could hurt you later via tax and landholding costs.

Conclusion

The desire to help family is admirable, but unless the structure is done properly from the start, it can cost far more than expected.

At Victorian Property Settlements, we work with families to identify the safest, clearest way to buy or support property ownership—whether it is a gift, co-purchase, trust, or nominee arrangement.