September is upon us, and spring is in the air. It’s time to shake off the winter cobwebs and enjoy the warmer weather the new season brings.
In a mixed picture for the Australian economy, inflation eased but not as much as expected. Meanwhile, rapidly rising discretionary spending along with global uncertainties may mean another interest rate rise in September or November.
The CPI was at 3.5% in the 12 months to July, down from 3.8% but a bigger fall was expected. And, underlying inflation, which the Reserve Bank watches more closely, remained steady at 3.6%.
Consumer confidence improved during August, rising to its highest level since March. Nonetheless, the result is considerably lower than a year ago.
There were some solid gains (and falls) in Australian shares during the month with the S&P/ASX 200 above 9000 for the first time since the Iran air strikes began. Globally, markets remained resilient despite the ongoing uncertainty.
The Aussie dollar ended August at its highest level in three months.
Downsizing with confidence
Deciding to downsize is a big life step. It is not just about moving to a smaller house. It can be about leaving behind a home full of memories, familiar streets, and routines you have built over many years.
For many, the idea of simplifying life, reducing maintenance, and freeing up finances can be very appealing. But for some, the reality of downsizing does not always match the rosy picture. In fact, one in six people who have downsized in the last five years wish they had not made the move, so it’s important to give the move careful consideration to avoid “downsizer regret”.i
The financial appeal of downsizing has been strengthened by the government’s downsizer contribution scheme, which has been developed to encourage older Australians to release equity from larger homes and free up housing supply for younger families. Eligible homeowners aged 55 or older can contribute up to $300,000 from the sale of their family home into superannuation, or $600,000 for couples. This can provide a meaningful boost to retirement savings, but the considerations go beyond how the figures stack up.
The realities of downsizing
The costs add up
The financial boost from downsizing is often what makes it appealing. Selling a larger home can free up money for retirement, travel, or other plans, and topping up superannuation could provide a tax benefit.
However, you must consider all costs. Moving expenses can add up quickly. Renovations to make a new home suitable, such as improving accessibility, or modernising kitchens and bathrooms, can be expensive.
Finding the “right” place can also be a consideration, as appealing homes for downsizers – single-storey, low-maintenance and close to services – can be scarce and expensive.
Less space can feel restrictive
Downsizing literally means going smaller which can feel freeing at first. But a small home can feel restrictive if there is not enough space for hobbies, collections, or visiting family. Trading a large garden, spare rooms, or entertainment areas for a lock-up-and-leave lifestyle may reduce maintenance stress, but it can also feel like a loss of freedom.
Home is where the heart is
Downsizing can sometimes mean a move away from a familiar area. Leaving a family home and community connections can be deeply emotional, and a home in a new neighbourhood can feel isolating. Where you live can matter just as much as the house itself.
Watch the impulsive purging
Many people experience regret after decluttering too quickly. In the rush to simplify, sentimental objects, practical tools or furniture, may be thrown away or donated, only to be missed later. Taking your time to evaluate what items to keep, or place in storage, can prevent feelings of loss.
How to avoid downsizing regret
Careful planning can make a huge difference to how you experience downsizing. Here are some strategies to help make the move feel more positive:
Take your time – Give yourself time to adjust emotionally, financially, and physically. Explore your options and imagine daily life in a potential home before committing.
Think about future needs – Make sure your new home can support the activities you value – whether it’s your hobbies or hosting family and friends.
Budget for hidden costs – Factor in moving expenses, agent fees, renovations, and strata or service charges.
Keep treasured items in mind – Don’t discard sentimental or useful items too quickly.
Stay connected – Consider proximity to family, friends, shops, and services to maintain social connections or, if you are planning a significant change of scenery, think about how you’ll develop personal connections in a new location.
Downsizing can be a smart financial decision, especially considering that government incentives may allow contributions to superannuation. However, it’s important to remember that these contributions could impact any Age Pension entitlements. We are here to assist you with the financial side of things.
Remember, it’s not just a numbers game. Emotional attachment, lifestyle changes, social connections, and practical needs all play a role in whether a move to downsize feels liberating or limiting. Taking time to plan, reflect, and consider how and where you want to live, can help ensure downsizing brings freedom, comfort, and happiness rather than regret.
Is it a gift or a loan when parents help kids buy a home? How to avoid family fights over money
Over recent decades, many Australian families have relied on getting money from the “Bank of Mum and Dad” to help with home purchases.
But this latest research shows there are growing legal risks from that trend.
Researchers spoke to 80 older parents and adult children. Most were from Sydney and had either given or received family money to help with buying a home. Typically, people in this study had provided or received an average of $75,000, though in one case it was $500,000.
They found both the parents and adult children in the study were often unclear whether the money was a gift or loan. Surprisingly few had even written down anything to make that clear.
That lack of clarity and communication has the potential to cause bitter family rifts, elder financial abuse and costly legal battles in the Family Court.
What counts as a gift?
If you’re applying for a home loan, many banks require written proof that funds from the “Bank of Mum and Dad” are genuinely a gift – meaning nothing is expected in return.
This is because a parental loan that needs repayments reduces how much the home buyer can actually afford to borrow from the bank.
In the study, some participants were asked to sign gift letters for their children to meet the bank’s requirements, even when they viewed the money as a loan. Henry, aged 60, described this scenario:
At the time we had to tell the bank that it was a gift. But in hindsight we said to [our son], ‘One day we’d like to see some of that come back to us’. Because it was $50,000 and it’s a lot of money to just give away.
Gifts provided to children by their parents have a specific status under Australian law, known as “presumption of advancement”. In the absence of proof, this means funds transferred from a parent to a child, regardless of their age, are most likely to be seen as a gift.
In practice, this puts the burden of proof on parents if they expect any future repayment.
Giving or receiving money can also affect Centrelink payments, so always check that first.
What counts as a loan?
A loan requires repayment of funds under certain terms and conditions. Typically, a loan involves an agreement (verbal or written) between parties. This includes repayment terms, whether interest applies, and a repayment schedule.
Written loans may be informal or formal.
Informal agreement documentation – such as an email or a letter – can help people involved with the loan remember what they agreed to as time passes.
Formal agreement documentation can be drafted by a lawyer. In some cases, it may also be signed and witnessed, with an extra copy held for safekeeping at the lawyer’s office.
The distinction between gifts and loans may appear relatively clear-cut. But in practice, this is rarely the case.
In this study, they found the relationship between gifts and loans often got blurred. For instance, loans often turned into gifts over time when repayments stopped being made or requested.
In several cases, parents they spoke to effectively “wrote off” loans (meaning they stopped expecting payments) when their adult children experienced financial hardship, a job loss or became parents.
In many cases, they found the parent and adult child had different understandings of whether the money transferred was a gift or loan.
For instance, Oliver, aged 60, helped his daughter Gianna, 34, with a deposit for a house, saying:
It’s more a gift. I don’t expect to see any of it back, but I made it clear to her that she had to use it to buy a property.
However, when Gianna was asked about the deposit money, she said:
That’s a good question. There’s not really any terms on it – no interest or any of that. But I’m going to repay it back. I think that’s what they’re expecting of it.
We need to talk about money
While conducting this research, they were struck by the lack of communication between family members.
Differing understandings of the funds being a gift or a loan typically resulted from unspoken assumptions.
Most of the participants were reluctant to speak about money, even with close family members. They often felt their arrangements were private family matters that did not need to be discussed with outside parties.
As a result, none of the 80 participants in the study sought professional legal or financial advice.
Very few had documented their agreement in any way, with the majority of money transfers remaining purely verbal.
Is it a gift or loan? Spell it out
To avoid family conflict down the track, it’s strongly recommended:
having clear and open conversations about gifts or loans
the expectations (or not) of repayment
what would happen if circumstances of either party change
putting all those shared expectations in writing.
Also seek professional financial and legal advice before transferring money. Although this may appear costly and unnecessary, it can help to avoid financially and emotionally costly consequences.
Free or low-cost legal help is available at community legal centres, while some universities also have legal clinics.
Disclaimer: This article provides general information only and does not take into account your personal objectives, financial situation or needs. It is not intended as financial or legal advice.
Source: This article is republished from The Conversation
What lies ahead for property investors?
Property investors are facing a whole new world this financial year following the tax reforms announced in the May Federal Budget, the ATO tightening the rules around claiming deductions for holiday homes and the government’s decision to abolish the ability to purchase residential property through self-managed super funds (SMSFs).
While there is no need to panic, the reforms will usher in significant change and require careful thought and detailed modelling of the financial implications for your investment portfolio and cash flow going forward.
New Capital Gains Tax rules
Major reforms to the CGT rules are set to take effect from 1 July 2027. The changes mean property investment assets held for more than 12 months will no longer receive a 50 per cent discount on their capital gain before tax. This will be replaced with cost-based indexation, with gains adjusted for inflation before CGT is applied.i
A minimum 30 per cent tax rate will also be introduced for net capital gains from 1 July 2027 and will apply to individuals, partnerships and companies. These tax changes will also apply to discretionary trusts from 1 July 2028.
Any capital gains made on an investment property that was held for more than 12 months and sold before 1 July 2027 will be taxed under the existing 50 per cent CGT discount rules. Gains after this date will be taxed using the new minimum 30 per cent rules.
With the window to take advantage of the current 50 per cent discount rule closing on 30 June 2027, property investors contemplating selling a rental property should seek professional advice to understand how these changes could affect their financial position.
Negative gearing changes
One of the most controversial Budget changes is to limit negative gearing for residential property investments to new builds.ii
Properties held prior to Budget night (12 May 2026) are exempt from these changes, but use of negative gearing by taxpayers purchasing established properties will be restricted. For commercial property, the current negative gearing rules continue with no change.
From 1 July 2027, investors who purchase an existing property will only be able to offset their residential investment property losses against other income from residential properties. This includes any capital gains. Excess losses can be carried forward to offset against residential property income in future years. The changes will apply to individuals, partnerships, companies and most trusts, but widely held trusts and super funds (including SMSFs) will be excluded.
New rules for holiday homes
If the Budget proposals aren’t enough to give property investors a headache, the ATO has made it clear its approach to holiday home tax deductions will be tougher.iii
Following the release of a new holiday home tax ruling, owners will now be restricted to minimal private use each year if they wish to retain access to tax deductions.
From 1 July 2026, deductions for ownership costs like mortgage interest, council and water rates, insurance, repairs and maintenance may be denied depending on when and the way a holiday home is used. Advertising and cleaning expenses, booking fees and commissions remain deductible.
Personal use during peak periods is now a signal that a property is primarily a leisure asset rather than an income-producing one. If the property is available for most of the year, but is blocked out during Christmas, Easter, school holidays and local peak periods, it is now likely to be assessed as a property that is not mainly used to generate income.
Time to reassess your property portfolio
Given this strict new interpretation of the deduction rules by the ATO, the Budget tax reforms to CGT, along with the banning of SMSFs from Limited Recourse Borrowing Arrangement (LRBA) for residential properties, property investors are urged to seek professional advice early on and review their property investment strategy in light of the changes.
Transitional rules, valuation approaches and record-keeping requirements will be critical. Investors should ensure documentation is up to date, consider timing of transactions carefully.
If you would like to discuss any of the changes and how they may affect you, please contact our office today.
i Proposed reforms to the CGT rules |Treasury
ii Negative gearing explainer | Treasury
iii Rental property deductions | ATO
