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NattyDC(Newbie)Newbie
3 Mar 2025

Mum has a reverse mortgage which is about 55% of the value of the home. We are thinking about paying out the loan and becoming her ‘bank’ as there will be no money left to enable her to go into care in a couple of years due to her failing eyesight if we leave it in her current arrangement. It will be most of our saving so will need to charge an interest rate so we don’t lose money. We have been supplementing her income and maintaining her home for many years at our cost. Is there any tax implications for us?


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426 views
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Freeze120(Champion)Champion
3 Mar 2025

Hi @NattyDC


Thats a beautiful thing to do for your mum


If you're charging interest, you'll be earning an income on what your mum is paying back. So you'll have to declare this income on your tax return. It'd be a good idea to get a contract written up with the interest rate and repayments to make sure you have records come tax time.

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Most helpful reply

Freeze120(Champion)Champion
3 Mar 2025

Hi @NattyDC


Thats a beautiful thing to do for your mum


If you're charging interest, you'll be earning an income on what your mum is paying back. So you'll have to declare this income on your tax return. It'd be a good idea to get a contract written up with the interest rate and repayments to make sure you have records come tax time.

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NattyDC(Newbie)Newbie
3 Mar 2025

Thankyou for your reply. The interest will never be paid as she has never had and never will have, any money. The interest will accumulate and be taken from the estate on her eventual death if there is anything left after aged care fees. My sister has said she is happy for us to do this as she has had nothing to do with parent for 25years and knowing how high the reverse mortgage is, it will all be gone in 4-5 years. But we want to make sure we don’t get hit with some kind of magic tax. We also hope to get out money back at some point. So the aim is to save some equity in the house, to pay us back and give sister something as well.

Liked by Freeze120

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What are the tax implications of paying out parents mortgage? | ATO Community