Trying to purchase a home in the Sydney property market is challenging given the rise in prices over the past few years.

One strategy children in their 20's and 30's have employed to crack the market has been to ask their parents/parents-in-law to provide financial guarantees over the loans they are taking out to help them get a loan they:

b - may get but with financial penalties (such as large lenders mortgage insurance payments)

I wrote the article after interviewing several people in the finance/property industry and sought their opinion about family guarantees, what they are, what are the risks, what should people thing about and how to look at it further.

Written for The Australian Newspaper - The bank of mum and dad

Granny Flat Strategy:  Top 7 Considerations

Written For The Australian - SMSF investors eye overseas property after budget lending ban

Ban property lending inside super? Fine, say Australia's most determined SMSF investors — we'll just buy a villa in Sicily instead.

The Albanese government's ban on residential property lending inside SMSFs was meant to cool the sector's appetite for bricks and mortar. Instead, from what I'm seeing, it's simply redirected the hunt. Trustees who can no longer gear into an Australian house are now looking at Aussie commercial property — and increasingly, at overseas markets where cash purchases are within reach.

The numbers tell the story. Around a quarter of SMSF assets sit in property, but less than 2 per cent is offshore. That figure hasn't budged in five years, but I think it's about to.

Why? Because $300,000 doesn't buy much in Sydney, but overseas it stretches remarkably far — a ski house in Japan, a colonial home in Mexico, sea-view flats in Georgia, or that Sicilian villa. Buyer's agent Kitty Parker recently picked up a New Zealand commercial property for under $67,000 with a 23 per cent gross yield. Try finding that in Parramatta.

But here's where I urge caution. Buying overseas in your SMSF is not a weekend hobby. Your trust deed and investment strategy must permit it. The sole purpose test still applies — meaning no family holidays in your Tuscan farmhouse. Related party rules mean your cousin can't rent your Greek unit. Break these and the ATO won't care how charming the olive trees are.

Then there's the practical mess: different time zones, currencies, languages, tenancy laws and tax regimes. Multiply every headache of a domestic investment property by ten.

My concern is that unfamiliarity breeds losses. Slick agents will push overpriced off-the-plan stock in overdeveloped areas dressed up as "opportunity." If you're serious about offshore SMSF property, engage an independent buyer's agent who works for you — not the developer.

James Gerrard - SMSF investors eye overseas property after budget lending ban

Could Canberra's backdown on the so-called "death tax" have handed wealthy families a quiet workaround? I think it might have.

When the government caved to public pressure and exempted testamentary trusts from the incoming 30 per cent minimum tax on discretionary trust distributions, it left a curious gap. Testamentary trusts – trusts activated only through a will after death – retain a very generous tax perk dating back to 1980: distributions to minors are taxed at adult marginal rates, meaning up to $22,500 per child per year can flow through tax-free once the Low Income Tax Offset is applied. Compare that to a standard family trust, where a minor pays up to 47 per cent on anything above $416.

Here's where it gets interesting. Picture Tom, mid-40s, high income, three young kids. His elderly mother Kate needs aged care. Tom gifts her $1m to cover the refundable accommodation deposit. Kate keeps her pension (the RAD is exempt from the assets test), and when she passes, the $1m returns to Tom's estate via her will – which conveniently contains a testamentary trust clause. Tom invests the money, generates $55,000 a year, splits it between his three kids, and pays zero tax. Had he kept the money in his own name, he'd have handed nearly half to the ATO. Had he used a family trust, the new 30 per cent rule from July 2028 would bite.

Could this become a widespread strategy? I have my doubts. Part IVA anti-avoidance provisions loom large, especially if the money moves shortly before death and the will is freshly amended. There are also real-world risks – the parent spending the funds, a Family Provisions Act challenge, or pension and aged-care fee consequences from the initial gift.

My honest view? It's unsavoury, the risks are high, and practical use will likely be limited. But the loophole exists – and Canberra should probably close it before someone tests it.

James Gerrard - A potential trust tax loophole that’s survived Canberra’s ‘death tax’ U-turn

Written For The Australian - A potential trust tax loophole that’s survived Canberra’s ‘death tax’ U-turn

If you've been dreaming of buying an investment property inside your self-managed super fund with a bit of borrowed money, the clock is ticking — and it's ticking loudly.

Thanks to a last-minute deal between Labor and the Greens, one of the most powerful wealth-building strategies for retirement is being shut down. Buying residential property in an SMSF using leverage, then flicking the switch to tax-free rental income and capital gains after age 60, has been a go-to play for years. Not anymore.

The ban on SMSF property lending kicks in 45 days after the legislation gets royal assent, which puts the effective deadline somewhere around mid-August. And whether that deadline applies to contract date or settlement date? Still unclear.

If you don't already have an SMSF set up, I'd say you've probably missed the boat. Between establishing the fund, rolling over your super, getting loan pre-approval, finding a property, doing due diligence and exchanging contracts, six weeks is a serious stretch. If you already have an SMSF, you've got a fighting chance — but only if you move now.

That said, don't run around like a headless chicken. There are exemptions worth knowing about. Commercial property inside an SMSF with a loan is still on the table, and I expect this to be the next hot spot for investors, particularly small business owners who want to be their own landlord. After years of sluggish growth, commercial could finally have its moment.

Residential property in an SMSF is also fine if bought outright — expect a tilt toward cheaper regional markets as trustees adapt.

For everyone else, family investment companies are being touted by accountants, but tread carefully — the ATO's Part IVA rules are unforgiving. And with negative gearing disappearing and a 30 per cent minimum CGT looming, the property investing landscape has fundamentally shifted.

James Gerrard - SMSF property investors race deadline as ban kills key strategy

Written For The Australian - SMSF property investors race deadline as ban kills key strategy

Here's a contradiction worth chewing on: the federal government keeps telling us it wants to fix the housing crisis, yet it's quietly running a scheme that pays retirees to stay put in their oversized family homes.

It's called the Home Equity Access Scheme (HEAS), and right now more than 18,000 retirees are drawing tax-free loans of up to $70,600 a year at rates well below anything a bank would offer. And here's the kicker — you don't need to actually be on the age pension to access it. You just need to be *eligible*. That opens the door to almost anyone over 67 who owns a home, including some very comfortably-off retirees.

To be clear, I think the HEAS is a genuinely good scheme. It gives older Australians the option to fund their retirement without having to sell the family home. But you can't have it both ways. If the government is serious about intergenerational fairness — and hitting mum and dad property investors, family trusts and testamentary trusts in the recent budget in the name of that fairness — then why is HEAS sitting untouched, actively encouraging retirees to hold onto four-bedroom homes that young families would give their right arm for?

Meanwhile, the whack-a-mole continues. Squeeze investment property in personal names, and investors pivot to SMSFs, where capital gains tax is just 10 per cent and drops to zero in pension phase. The FAAA has already flagged a surge in property spruikers pushing SMSF property investment on social media. My prediction? Once Canberra clocks what's happening, super will be the next target.

The uncomfortable truth is that current housing policy isn't coherent. It penalises the middle while leaving one of the biggest levers — encouraging downsizing — completely unpulled.

James Gerrard - Government scheme pays retirees to stay put, worsening housing crisis

Written For The Australian - Government scheme pays retirees to stay put, worsening housing crisis

Could the government's helping hand actually be pushing first-home buyers off a cliff?

That's the uncomfortable question I've been wrestling with as I look at the numbers behind the 5% Deposit Scheme. Since its inception, 248,000 Australians have used it to get into the property market, with 61,281 jumping in during the 2024-25 financial year alone. The pitch is seductive: skip the painful years of saving a 20 per cent deposit and get into a home now. But here's what nobody seems to be talking about — lenders insist on that 20 per cent buffer for a reason.

With property values softening, three RBA rate hikes already this year, and forecasts pointing to a further 5 to 10 per cent decline in dwelling prices, we're staring down the barrel of a negative equity problem that could engulf up to 100,000 recent buyers. Do the maths on an average $1m home: a 10 per cent fall puts the typical 5% Deposit Scheme borrower $50,000 underwater. Multiply that out and we're talking billions in combined negative equity.

What concerns me most is the fine print most buyers never read. The scheme has no income cap (someone on $500,000 can use it), no mandatory financial literacy requirement, and it's open to permanent residents who can simply leave the country. If they walk, the taxpayer foots the bill to the banks. That's not a housing policy — that's a contingent liability dressed up as compassion.

For those already caught in the squeeze, my advice is to ride the cycle. Property has always moved through growth, peak, fall and trough. Consider a granny flat for extra income (mind the CGT consequences), renovate to manufacture equity, or look at renting the property out before selling at a loss.

The real question is whether the government will eventually bail out the very buyers it lured in with wafer-thin deposits. I suspect we'll find out sooner than anyone would like.

James Gerrard - First-home buyers in negative equity squeeze as property markets soften

Written For The Australian - First-home buyers in negative equity squeeze as property markets soften

Up to 47 per cent of your business sale proceeds, gone. That's the reality many Australian founders are staring down with the proposed capital gains tax overhaul, and it's no wonder so many are muttering about packing up and leaving. But where would you actually go?

I've taken a look at the realistic options, and the answer depends a lot on how big a lifestyle shock you're willing to absorb.

The softest landing is New Zealand. No visa headaches for Aussies, similar income tax rates, and crucially, a full CGT exemption on investment property held beyond two years under the brightline test. It won't slash your tax bill dramatically, but it's the path of least resistance.

If you want a serious tax reduction without giving up city living, Singapore is the standout. A top marginal rate of 24 per cent that only kicks in above $1.09m, generally no CGT, and a lifestyle Australians tend to settle into easily. The catch? Permanent residency is hard to get and the cost of living is brutal.

For the genuinely tax-allergic, Vanuatu and Dubai offer near-zero tax environments — but you're trading Bondi for cyclone season or 50C summers. Panama's territorial tax system is interesting if your income is generated offshore, and Bulgaria's flat 10 per cent appeals if you want a European base on a budget. Fiji sits in the middle with a 10 per cent flat CGT.

Here's the part most people gloss over though: leaving Australia for tax purposes isn't as simple as boarding a plane. The 183-day rule is just the start. The ATO can deem you to have disposed of shares, ETFs and managed funds on departure, triggering CGT. Property gets treated differently again.

My honest view? Plenty of entrepreneurs talk about leaving. Very few actually do.

James Gerrard - Fleeing the CGT shake-up? Best low-tax havens for entrepreneurs

Written For The Australian - Fleeing the CGT shake-up? Best low-tax havens for entrepreneurs

Did you vote for a 30 per cent minimum tax on your family trust? Neither did I. Yet here we are, picking through a budget that came wrapped in the language of "fairness" but is quietly reaching deep into the pockets of middle Australia.

Let's be honest about who actually uses discretionary family trusts. It's not just billionaires sipping champagne on superyachts. It's the local butcher, the plumber down the road, the pharmacist on the corner. These structures are about asset protection, succession planning and managing risk in a small business. Slapping a flat 30 per cent tax on distributions treats every beneficiary, whether a university student or a part-time working spouse, as if they're earning $200,000. That's not fairness. That's a fiction.

And the double-taxation issue with bucket companies is genuinely alarming. By the time profits flow through the trust, into the company, and out as a dividend, the effective tax rate can hit 63 per cent. That violates a principle of taxation that has stood since Roman times: you tax income once.

Then there's the CGT overhaul. Investors will need formal valuations as at 1 July 2027 — except Australia has roughly 3,000 valuers and over 5.5 million assets that may need valuing. Do the maths. The only guaranteed winners I can see here are the valuers themselves.

The cruellest irony is that this is sold as helping young Australians into property. But the 25-year-old using Help to Buy today will, in 20 years, find none of the wealth-building tools their parents had: no negative gearing, no 50 per cent CGT discount, and a 30 per cent minimum CGT rate waiting for them.

What worries me most is the precedent. Division 296 targeted the top end. This budget makes it clear that anything is now on the table — and none of it was taken to the last election.

James Gerrard - Budget hits middle Australia’s wealth, not just the rich

Written For The Australian - Budget hits middle Australia’s wealth, not just the rich

Has the federal government just killed off the great Australian investment playbook? Not quite — but it has rewritten enough of the rules that anyone serious about building wealth needs to rethink their next move.

The budget delivered the biggest shake-up to investment taxation in 25 years, and investors are already scrambling. Negative gearing on residential property is gone for purchases made from now, kicking in from July 2027 — unless you're buying brand new. But here's the catch: negative gearing itself isn't dead. It lives on for commercial property and geared share portfolios. I expect to see a genuine boom in commercial property values as savvy investors chase that 47 per cent tax break elsewhere.

For residential property, the game shifts to yield. High-income earners who still want bricks and mortar will be hunting cashflow-positive properties, and I suspect we'll see prices rise for assets that can generate stronger rental income. If you already own an investment property, sit tight — grandfathering protects you. But now is the time to think about that granny flat, the Airbnb fit-out, or the renovation that boosts rent. Every dollar spent lifting yield is going to work harder under the new regime.

Then there's the capital gains tax overhaul, with indexation returning from July 2027. Expect a surge in SMSFs as people shift property purchases inside super, where CGT is just 10–15 per cent in accumulation and zero in retirement up to the transfer balance cap.

But the bombshell for me is family trusts. A 30 per cent minimum tax on discretionary trust distributions from July 2028 effectively detonates the income-splitting strategy thousands of small business owners rely on. Fixed trusts escape, and family investment companies suddenly look far more attractive thanks to franking credits.

If it all feels overwhelming, Dubai and New Zealand are looking pretty appealing right now. For everyone else — call your accountant.

James Gerrard - Investors scramble for tax strategies as Chalmers redraws wealth rules

Written For The Australian - Investors scramble for tax strategies as Chalmers redraws wealth rules

Are you over 45? If so, you've just become the federal government's favourite ATM.

The numbers don't lie. At the 2025 federal election, Baby Boomers slipped to just 33 per cent of eligible voters, while Gen Z and Millennials surged to 47 per cent. Policy, unsurprisingly, has followed the votes.

Look at the hits Gen X and Boomers have copped in quick succession. Division 296 slaps a new tax on large super balances — punishing the very people who did exactly what successive governments told them to do: save hard and be self-sufficient in retirement. There's now speculation borrowing inside super to buy property could be banned. Capital gains tax rules look set to tighten. Negative gearing could be capped. Family trust distributions may face a 30 per cent minimum tax. Novated lease benefits on EVs are being wound back. Home battery rebates have been watered down. Centrelink's deeming rate has jumped 0.5 per cent, making the age pension harder to access. And aged care reforms now sting self-funded retirees with higher fees and higher lifetime thresholds.

Meanwhile, younger Australians are getting an entirely different experience of government. $16bn of HECS debt wiped. First home buyers guaranteed with just a 5 per cent deposit — or 2 per cent under the Help to Buy Scheme. The amended stage three tax cuts skewed to favour lower brackets. Paid parental leave expanding to 26 weeks. Subsidised childcare three days a week for households earning up to $533,280.

I'm not arguing against helping younger Australians — many of these policies have genuine merit. But the pattern is unmistakable. Older Australians who played by the rules, paid their tax and built their own retirement are quietly footing the bill for the political priorities of a new majority voting bloc.

The only silver lining? If the government keeps propping up our kids, perhaps the bank of mum and dad can finally close its doors.

James Gerrard - How the government is squeezing Boomers to boost young voters

Written For The Australian - How the government is squeezing Boomers to boost young voters

Remember when we were all pencilling in rate cuts for 2026? That ship has well and truly sailed. With the RBA lifting the cash rate to 4.35 per cent this week — its third hike this year — and the sharemarket now tipping a peak of 4.8 per cent by March, mortgage holders need to stop hoping and start acting.

The good news? There are levers you can pull right now to take real money off your interest bill.

Start with the most underused phone call in personal finance: ring your lender and ask for a pricing review. Better still, get a mortgage broker to line up a competing pre-approval first. Walking in with leverage works. Lenders would rather shave 5 to 20 basis points off your rate than lose you to the retention team's worst nightmare — a refinance to a competitor offering cashback.

Next, the offset account. I've lost count of how many clients I've met who keep six figures sitting in a "rainy day" transaction account while paying 6 per cent interest on a mortgage. Same access, vastly different outcome. On a $1m loan with $100,000 offset, you're charged interest on $900,000. That's thousands a year, gone.

Then take it further: pump your salary straight into the offset, run daily spending through a credit card with an interest-free period, and clear the card on the due date — not a day earlier. Cancel direct debits that fire weeks ahead of schedule. Every dollar that lingers in the offset, even for 24 hours, reduces your interest bill.

If cashflow is genuinely tight, ask your lender to reset repayments to reflect your redraw balance. Just be honest with yourself about how much buffer you actually need.

We could be staring down home loan rates of 6.5 to 7 per cent before this cycle plateaus. Hope isn't a strategy. Action is.

Written
for
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-
The
bank
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mum
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Related Content

Written For The Australian - SMSF investors eye overseas property after budget lending ban

Written For The Australian - A potential trust tax loophole that’s survived Canberra’s ‘death tax’ U-turn

Written For The Australian - SMSF property investors race deadline as ban kills key strategy

Written For The Australian - Government scheme pays retirees to stay put, worsening housing crisis

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Other items in the media —

Written For The Australian - SMSF investors eye overseas property after budget lending ban

Written For The Australian - A potential trust tax loophole that’s survived Canberra’s ‘death tax’ U-turn

Written For The Australian - SMSF property investors race deadline as ban kills key strategy

Written For The Australian - Government scheme pays retirees to stay put, worsening housing crisis

Written For The Australian - First-home buyers in negative equity squeeze as property markets soften

Written For The Australian - Fleeing the CGT shake-up? Best low-tax havens for entrepreneurs

Written For The Australian - Budget hits middle Australia’s wealth, not just the rich

Written For The Australian - Investors scramble for tax strategies as Chalmers redraws wealth rules

Written For The Australian - How the government is squeezing Boomers to boost young voters

Written For The Australian - How to beat rising interest rates and cut your mortgage costs

Written
for
The
Australian
Newspaper
-
The
bank
of
mum
and
dad

Other
items
in
the
media
—