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_naturalcrackers(Newbie)Newbie
12 Apr 2021

My parents are both retired and still have a mortgage on their house. My siblings and I would like to buy the house from them and then rent it back to them at a rate that just covers the repayments. For the sake of a mortgage, we would be treating this as an investment property.

The house is probably worth around $360,000 and the outstanding loan amount is around $230,000. We would like to buy it from them for the value of the loan.

I guess this would be equivalent to them gifting us the ~$130,000 in equity in the property?

Will we be liable for any tax doing this?

5,320 views
1 replies
5,320 views
1 replies

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Most helpful replyATO Certified Response

_DavidATO(Community Support)Community Support
ATO Certified Response13 Apr 2021

Hi @naturalcrackers,

No, there are no tax liability for buying a house under market value but you will need to declare the income you receive while you are renting the property to your parents. You may need to valuate the property by a professional to work out the capital proceeds when working out your capital gains or loss.

I have found some good information for Transferring real estate to family or friends with an example similar to your situation and Rental income you must declare on our website that may be helpful.

Hope this helps!

All replies

Most helpful replyATO Certified Response

_DavidATO(Community Support)Community Support
ATO Certified Response13 Apr 2021

Hi @naturalcrackers,

No, there are no tax liability for buying a house under market value but you will need to declare the income you receive while you are renting the property to your parents. You may need to valuate the property by a professional to work out the capital proceeds when working out your capital gains or loss.

I have found some good information for Transferring real estate to family or friends with an example similar to your situation and Rental income you must declare on our website that may be helpful.

Hope this helps!

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Tax considerations for buyin parents house below market value | ATO Community