Key points
- From 1 July 2027, negative gearing is restricted to newly built homes and the CGT discount is replaced with indexation plus a minimum 30% tax on gains.
- Those changes reshape the buy-to-invest path, not the buy-to-live-in one.
- A gift is simple; a documented loan protects the money in a relationship breakdown.
- Going guarantor puts your own home on the line, so treat it as a real liability.
Parents who want to give their children a start are increasingly being asked for help with a home, and the size of that ask keeps growing. There are more ways to do it than writing a cheque, and each one has a right and a wrong way to go about it.
Two things have changed since this was simple. Deposits have grown faster than wages, so the gap parents are asked to bridge is larger. And the 2026-27 Federal Budget reshaped the tax treatment of property investment, which changes the calculation if the plan is for your child to buy an investment property rather than a home to live in.
Buy to live in, or buy to invest
The first question is what kind of purchase you’re helping with, and the Budget made that question matter more.
For a child buying a home to live in, the owner-occupier path is largely unchanged. The deposit is the hurdle, and most of the strategies below are about clearing it.
For an investment purchase, the maths shifted. From 1 July 2027, negative gearing is restricted to newly constructed homes: losses on an established investment property can only offset rental income or future capital gains, not salary. The CGT discount is being replaced with inflation indexation and a minimum 30% tax on gains over the same timeframe. None of that makes property investment a bad idea, but it does mean the old “buy an established rental and negatively gear it” plan no longer works the way it did. If the goal is investment, the structure deserves proper advice before anyone signs.
Help them build the deposit
The deposit is where most first home buyers stall, and it’s where parental help goes furthest.
- A purposeful stay at home. An adult child living at home while they save can close a deposit gap fast, provided it’s a plan rather than a drift. Set the arrangement up with a savings target and a timeframe, so the time at home is buying something.
- The First Home Super Saver Scheme. First home buyers can make voluntary super contributions and later withdraw them, with earnings, toward a deposit. For many that’s a tax-effective way to build a deposit faster than a bank account. Limits and eligibility apply, so check the current terms.
- The First Home Guarantee (5% Deposit Scheme). From 1 October 2025 this scheme was expanded and renamed the Australian Government 5% Deposit Scheme. An eligible first home buyer can purchase with a 5% deposit and pay no lenders mortgage insurance, with the government guaranteeing up to 15% of the price. The income caps and the cap on the number of places have both been removed, so eligibility no longer depends on how much your child earns or how early in the year they apply. Property price caps still apply and vary by location, so check the current limit for your child’s target area.
A mortgage broker can tell you which of these your child qualifies for, and how each affects their borrowing capacity, before they set their heart on a place.
Buying together: co-ownership
If your child can’t get there alone, co-ownership lets two or more people share the purchase, the loan and the equity. Parent and child, or siblings together, is a common structure, and it can turn an impossible purchase into a manageable one.
It needs a written co-ownership agreement from the start: who pays what, what happens if one party wants out, and how the property is eventually sold or transferred. The property is a shared asset, and shared assets between family members go wrong most often when nobody wrote down the plan while everyone was still getting along.
Gift or loan? Write it down either way
Handing over money is the most direct help, and the most likely to cause a problem later if it’s undocumented.
A gift is simple and final: the money is your child’s, with no strings. A documented loan does two useful things a gift can’t. It protects the money if your child’s relationship later breaks down, because a recorded debt is owed by the couple rather than split as a shared asset. And it keeps things demonstrably fair between siblings, which heads off the resentment that undocumented “help” breeds.
Neither is wrong. But decide which one it is, put it in writing, and think through the awkward scenarios in advance: a relationship breakdown, an illness, or your own change in circumstances. A loan agreement that names an exit is worth far more than a generous impulse that was never recorded.
Going guarantor
A guarantor loan uses the equity in your own home as extra security for your child’s loan. It can remove the deposit hurdle entirely and avoid lenders mortgage insurance, which is why it’s popular.
Be clear about what it is. You are putting your own home behind your child’s debt. If they can’t make the repayments, the lender can come after your property, and that risk lasts until the loan is refinanced off your security or paid down enough to release you. Go in with a plan to be released within a few years and it’s a powerful tool. Go in casually and it’s how parents lose their retirement. Our guide to what changes when you use a broker covers how guarantor structures are assessed, and if your child has already been knocked back, what to do after a declined application is worth reading first.
Before signing on as guarantor, it’s worth checking whether your child qualifies for the Help to Buy scheme covered next. It reduces the deposit to 2% without putting your home at risk.
Help to Buy: the government’s shared-equity option
If your child is a first home buyer, the Federal Government’s Help to Buy scheme is worth understanding before you commit to going guarantor or gifting a large deposit. It’s structurally different from every other option in this article: the government becomes a co-owner of the home rather than helping fund the deposit.
How it works, in brief:
- Government contribution: up to 30% of the purchase price for an existing home, up to 40% for a new build (minimum 5%)
- Deposit required from your child: as little as 2%
- No lenders mortgage insurance on the loan, because the government’s contribution reduces the amount financed
- Eligibility (from 1 July 2026): Australian citizen aged 18 or over; taxable income up to $110,000 for a single applicant or $180,000 for joint applicants or single parents; not currently a property owner; property must be the primary residence
- State-based property price caps apply and vary by region — worth checking the current limit for your child’s target area
- 10,000 places per year, so timing and application readiness matter
The trade-off worth being clear about: the government shares the gains AND the losses in proportion to its equity stake. When your child sells the home, or buys out the Commonwealth share, the government receives its proportion of any capital gain. If the property has fallen in value, it takes its share of the loss too. And if your child’s income later exceeds the eligibility thresholds, they may be required to buy back the Commonwealth share, so a sharp income rise a few years in is a real scenario to plan for.
Applications go through participating lenders, not directly to Housing Australia. The official scheme details sit with Housing Australia, and a mortgage broker can tell you which lenders participate and whether your child’s numbers fit.
For parents, the appeal is straightforward: your child gets into a home with a small deposit and no LMI, and your own retirement isn’t riding on it. That’s a very different risk position from a guarantor arrangement, and worth exhausting first.
Passing it on through your will
Some help comes later, through your estate, and how you structure that matters as much as the amount. A testamentary trust built into your will can pass assets tax-effectively, provide ongoing support, and protect what you leave from moving outside the family in a relationship breakdown. If property is part of what you’ll pass on, your estate plan should say so deliberately rather than leaving it to a basic will.
Getting the help right
Helping a child into property touches lending, tax, and estate planning at once, which is exactly where a coordinated plan beats a good intention. AGS brings financial planning, mortgage broking and estate planning together, so the deposit strategy, the loan structure and the way you eventually pass assets on all fit rather than working against each other. Contact us to talk through the right approach for your family.
Frequently asked questions
Is it better to gift or lend my child a deposit? Both work, but the choice has consequences. A gift is simple and final. A documented loan protects the money if your child’s relationship breaks down, because it’s a debt of the couple rather than a shared asset, and it keeps things fair between siblings. Whichever you choose, put it in writing.
What is a guarantor home loan? A parent uses the equity in their own home as additional security for the child’s loan, which can remove the need for a large deposit and avoid lenders mortgage insurance. If the child falls behind, the lender can recover the shortfall from the parent’s home, and that exposure lasts until the guarantee is released.
Do the 2026-27 Budget changes affect helping my kids buy? They change the investment path. From 1 July 2027 negative gearing is restricted to newly built homes, and the CGT discount is replaced with indexation and a minimum 30% tax on gains. For a child buying a home to live in, the owner-occupier path is largely unchanged; for an investment purchase, the after-tax maths is different.
Can my child use their super for a first home deposit? The First Home Super Saver Scheme lets first home buyers make voluntary super contributions and later withdraw them, with the earnings, toward a deposit, which can be tax-effective. Limits and eligibility rules apply, so it’s worth checking the current terms before relying on it.
What is the Help to Buy scheme? A Federal Government shared-equity scheme for eligible first home buyers. The government contributes up to 30% of the purchase price for an existing home (40% for a new build) and your child provides as little as a 2% deposit, with no LMI. In exchange, the government shares proportionally in any future capital gain or loss when the home is sold or the Commonwealth share is bought back. Income and property price caps apply.