For example, Mr and Mrs Chen live in Hangzhou. Their daughter has worked in Melbourne for years, holds permanent residency, and has lived with her boyfriend for three years. They plan to buy a home together, and her parents will provide most of the deposit. Mrs Chen's worry is that if the couple separate, half of that money could be lost. Mr Chen wonders whether he should put his own name on the title to be safe.
The answers to both questions are more complicated than most people expect. When parents help buy a home, whether the money is a gift, a loan, held on trust or used to co-own the property affects how property is divided if the couple separates, foreign investment approval, stamp duty and first home buyer concessions. We explain each below, using Victoria as the example.
1. Four common structures: gift, loan, trust, or parents on title
- Gift: the simplest option, but once given the money belongs to the child. On separation it is generally treated as a contribution to the couple's property and is hard to get back.
- Loan: the parents keep the right to be repaid. But whether a loan is recognised in Family law as a genuine debt depends on whether it is documented in writing, whether there is a repayment arrangement, and whether the parents would really ask for the money back.
- Trust: a trustee holds the property, which can separate the asset from the child to some degree, but setup and running costs are higher and it can trigger extra land tax and foreign surcharges, so it needs planning with an accountant.
- Parents on title: the parents hold their own share as tenants in common, and that share is theirs. But it brings foreign investment approval, surcharge duty and first home buyer issues, covered below.
2. How the Family Law Act treats the parents' money on separation
When married couples and eligible de facto couples separate, property is divided under the Family Law Act 1975 (Cth). The Family Law Amendment Act 2024, which took effect on 10 June 2025, wrote the courts' long-standing approach into section 79: identify the parties' property and liabilities, consider their contributions, then their current and future circumstances (now expressly including the economic effects of family violence, the housing needs of a party caring for children, and wastage caused intentionally or recklessly), and finally decide whether the outcome is just and equitable.
A gift from parents is generally treated as a contribution made on behalf of their own child. It may increase that child’s share, but it will not be left out of the property pool altogether. Loans are different: the court looks at whether the amount of the debt can be established and whether the lender is ever likely to enforce it. In recent appeal cases, the court has held that a family loan that went unpursued for years, and whose amount was never properly recorded, should not be deducted as a liability. In other words, a "loan" with no written agreement, no repayments and no demand from the parents may well be treated as a gift on separation.
3. Putting protection in writing: loan agreements, security and financial agreements
If parents want to keep the right to be repaid, they should sign a formal loan agreement before sending the money, setting out the amount, interest, how it will be repaid, and when it falls due or must be repaid early (for example, if their child separates or the property is sold). They should then actually follow the agreement and keep records of repayments. Parents can also consider registering a mortgage over the property as security, but if there is a bank loan, a second mortgage usually needs the bank’s consent. If the lender is a foreign person, taking a mortgage over Australian residential property may itself raise foreign investment issues, so check this first.
Another tool is a Binding Financial Agreement (BFA). Married or engaged couples under Part VIIIA of the Family Law Act, and de facto couples under Part VIIIAB, can agree in advance how the parents' contribution will be dealt with if they separate. For a BFA to be binding, each party must receive independent legal advice before signing, and the formal requirements are strict; a defect can see the agreement set aside.
4. If the parents are foreign persons: foreign investment approval and state surcharges
People who are not Australian citizens or permanent residents (other than New Zealand citizens on a special category visa) are generally "foreign persons" and, regardless of the price, generally need foreign investment approval before acquiring an interest in residential land. In addition, a temporary ban on foreign persons, including temporary visa holders, buying established dwellings has applied since 1 April 2025 and has been extended to 30 June 2029, with only limited exceptions. So if the parents want to be on the title of an established home, or the child is still on a student or work visa, buying an established home may not be possible at all; a new dwelling or vacant land with approval may be the only route.
In Victoria, foreign purchasers of residential property also pay foreign purchaser additional duty of 8%, and may then face an annual absentee owner surcharge of 4% of the land value. If the property is held through a trust that may be treated as a foreign trust, these surcharges can also apply.
5. First home buyer concessions can be lost if parents go on title
Eligible first home buyers in Victoria pay no stamp duty on homes valued at $600,000 or less, and receive a concession between $600,001 and $750,000. But all the purchasers must meet the First Home Owner Grant eligibility criteria. If a parent has owned a home in Australia before, or otherwise does not qualify, putting them on title can cost the whole purchase the concession.
6. Source-of-funds checks and cross-border transfers
Australia has no separate gift tax, but large overseas transfers are subject to banks' anti-money laundering checks. From 1 July 2026, lawyers, conveyancers and real estate agents also came under the AML/CTF regime and must carry out customer due diligence. It is worth preparing evidence of where the parents' money came from in advance, such as salary, business income, property sale or savings records.
Money leaving mainland China is also subject to foreign exchange rules. Individuals currently have an annual facilitation quota equivalent to US$50,000 for buying foreign currency, must truthfully declare the purpose, and under the current rules personal foreign currency purchases may not be used for buying property overseas, securities investment or other capital account items. Families should transfer funds only through lawful channels, with advice from professionals in mainland China. We do not advise on getting around foreign exchange controls.
Practical checklist
- Decide first whether it is a gift, loan, trust or joint ownership, and confirm the tax effect with an accountant
- Loan: sign a written loan agreement before sending the money, follow the repayment terms and keep records
- Consider a registered mortgage in the parents' favour, with the lender's consent obtained first
- Have the child and partner consider a BFA, each with independent legal advice
- Confirm each purchaser's status: foreign person or not, whether approval is needed, and whether an established home can be bought
- Work out foreign purchaser duty, absentee owner surcharge, and whether first home buyer concessions would be lost
- Prepare full source-of-funds evidence and transfer money only through lawful channels
Frequently asked questions
If we pay the deposit, will we definitely get it back if our child separates?
Not necessarily. A gift is generally treated as a contribution on your child's side rather than returned to you. A documented loan that is actually being repaid is more likely to be treated as a liability, but the outcome still depends on the circumstances.
Can we sign the loan agreement later?
We would not recommend it. Documents signed after the event carry less weight and are easily challenged in a dispute. It is best to sign before the money is sent and follow it from the start.
Our child is on a student visa. Can they buy a home with our money?
A student visa holder is generally a foreign person who needs foreign investment approval, and during the ban generally cannot buy an established dwelling. A new dwelling or vacant land may be possible with prior approval, and Victorian foreign purchaser additional duty will apply.
Our child isn't married. Does family law still matter?
Yes. Eligible de facto couples (for example, after two years together, or where there is a child) are covered by the same Family Law Act property rules, and can also make a financial agreement.
Is there tax when parents send money to Australia?
Australia has no separate gift tax, and simply receiving a gift is generally not taxable income. Interest on a loan or investment returns may have tax consequences, and the sending country has its own rules, so get advice from accountants in both places.
Funding a child's home touches family law, property, foreign investment and tax, and the structure is best settled before the contract of sale is signed. Chua Tan Associates has practised in Melbourne since 1990, works in Mandarin, Cantonese and English, and handles family law, property and cross-border matters. Justin Chua is a Family Dispute Resolution Practitioner, Family Law Arbitrator and Accredited Family Business Advisor, and can help families document their arrangements before the money moves, or mediate if disagreements arise later. Call us on 03 9602 3988 or contact us online. We can meet at our Melbourne CBD office or by video.
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This page provides general information only and is not legal advice.
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