Across Australia's multicultural communities — Lebanese, Indian, Vietnamese, Chinese, Greek, and others — it's common for parents to want to help their adult children get into the property market. As property prices have surged, the "bank of mum and dad" has become essential for many first home buyers.
The downsizer scheme adds a specific tool: parents aged 55 or older who sell the family home can contribute up to $300,000 each into superannuation, outside the usual caps. This frees up cash from the property sale which can then be gifted to their children for a deposit — while parents still top up their own retirement savings.
This guide explains both sides: how the downsizer scheme works for parents, and how adult children can use gifted funds to buy their first home.
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Part 1: The Downsizer Contribution — For Parents
What Is the Downsizer Scheme?
The downsizer contribution is an Australian government scheme that allows people aged 55 or older to make a one-off contribution of up to $300,000 per person ($600,000 for a couple) into their superannuation fund, from the sale proceeds of a qualifying family home.
It sits outside the normal concessional and non-concessional super contribution caps — meaning a couple can contribute an extra $600,000 to their retirement savings at once, without triggering the usual limits.
Downsizer Eligibility Checklist
- You or your spouse owned the property for at least 10 years before the sale
- You must be 55 years of age or older at the time of contribution
- The property was your principal place of residence at some time during the ownership period
- The property sale is exempt (or partially exempt) from CGT under the main residence exemption
- You must make the contribution within 90 days of settlement
- The contribution is from the proceeds of the sale — it doesn't have to be the full amount
The Real Benefit: Freed-Up Capital
Here's the strategy. A couple sells a Sydney home for $1.8 million. They contribute $600,000 into superannuation via the downsizer scheme (excellent for their retirement). That leaves $1.2 million from the sale after the super contribution — plus their existing savings. They can now gift a meaningful deposit to their adult children, while being well-funded in retirement.
Part 2: Gifting a Deposit to Your Adult Children
How Lenders Treat Parental Gifts
When parents gift money to their children for a property deposit, lenders will accept it — with conditions:
- A gift letter (statutory declaration) from the parents stating the funds are a non-repayable gift
- Parents' bank statements showing funds leaving their account
- Proof of the parent-child relationship
- The gift must be in the child's Australian account ideally 3 months before applying (genuine savings)
Some lenders require the applicant to have at least 5% of the total purchase price in genuine savings from their own income. Others accept 100% gifted deposits with a strong enough gift letter. Policy varies — a broker can identify which lenders are most accommodating.
Guarantor vs Cash Gift: Which Is Better?
| Option | How It Works | Risk to Parents | Effect on Children's Loan |
|---|---|---|---|
| Cash gift | Parents give cash; used as deposit | Parents lose the capital permanently | Higher deposit = lower LVR, potentially no LMI |
| Guarantor loan | Parents use property equity as security | Parents' property is at risk if children default | No LMI; children don't need a 20% deposit |
| Equity release | Parents refinance to unlock equity | Parents take on new debt | Children receive cash gift; same as above |
The downsizer strategy involves selling the property and freeing up cash, which removes the guarantor option (since the parents no longer have the property as security). A cash gift is the natural next step — clean, simple, and accepted by all lenders.
Tax Implications for Children Receiving a Gift
Receiving a cash gift in Australia is not taxable income for the recipient. Your child does not pay tax on money gifted to them as a property deposit. There is no gift tax in Australia.
The parents may have CGT implications from the property sale (depending on whether it was their principal place of residence and the ownership history) — this should be discussed with their accountant before selling.
Combining Gifted Funds with First Home Buyer Schemes
Children receiving a parental gift can combine it with first home buyer schemes:
- First Home Guarantee: Can use gifted funds as part of the 5% deposit (some lenders require 5% to be genuine savings — check with a broker)
- First Home Owner Grant ($10K): Available regardless of where the deposit came from, provided eligibility criteria are met
- Stamp duty concession: Available to eligible first home buyers regardless of deposit source
Frequently Asked Questions
our broker team helps Sydney families coordinate parental gifts, guarantor loans, and first home buyer schemes so adult children can buy with maximum support. Call 0432 634 648.
Related: First Home Buyer Guides
Parents selling to help you buy?
our broker team can help you structure the gift correctly and maximise your first home buyer benefits. Free 15-min call.
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