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RendaDu(I'm new)I'm new
30 Sept 2025

Hi. We are borrowing funds from our parents to buy an investment property. We will have a contract set up to state that they are a creditor, (so Bank and parents will be listed creditors). They don't want any interest paid, but on selling property, they want the growth % of the money they lent us. for example if they lend us $400000 and the Bank $200000, and property is worth $600k when we buy and worth $800k When we sell, they want the growth of their input (2/3). Is there any tax implications for us or them (capital gains tax etc)

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80 views
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YellowPotato(Taxicorn)Taxicorn
30 Sept 2025

Isn't this just a convoluted way of doing joint in common/tenancy in common?


It sounds a bit fishy if you put down parents as creditors but they want the capital growth, not interest income - i.e. why not have them as co-owners of property? Should go to a financial advisor or tax agent and ask.

DamienATO(Community Support)Community Support
1 Oct 2025

Hi @RendaDu,

 

Yes, you'll likely need to account for CGT. Your parents may need to include their full profit in their assessable income, if the property is not in their name (no 50% CGT discount).


The factors that come to play are:

  • the property is an investment property
  • your parents provided you capital (the loan) with an agreement you would pay them a percentage of the growth in value (profit)
  • your parents don't own the property.

As @YellowPotato said, you should speak with a financial advisor or tax agent. You could also consider applying for a private ruling for an answer based on your personal situation.

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