Australia · 6 min read · Laddered Editorial · 8 Jul 2026
Bank of Mum and Dad: Gift, Loan, or Equity Share?
Australian parents tip in billions to get their kids into property. But 'helping with the deposit' can mean three very different things — a gift, a loan, or actually co-owning — and each has different consequences for everyone.
- family
- deposit
- australia
- co-ownership
This article is general information only and is not legal, financial, tax, or property advice. Consider advice from a qualified professional for your circumstances.
Gift, loan, or equity — which one are you actually doing?
When Australian parents help a child buy, they almost always call it "helping with the deposit." But that help takes one of three quite different legal shapes — a gift (money handed over, nothing owed back), a loan (money lent, to be repaid), or an equity share (the parents go on the title and genuinely co-own) — and most family trouble starts with nobody deciding which one it is.
It's not a small question. Research group Digital Finance Analytics has ranked the Bank of Mum and Dad among Australia's biggest home lenders, estimating the help parents provide in the tens of billions of dollars, with individual contributions commonly in the tens of thousands. Money at that scale deserves a decision, not a vague understanding.
Option 1: a gift
A gift is the simplest and by far the most common. The parents give the money, the child buys the home, and everyone moves on.
Lenders are comfortable with gifted deposits, but they'll usually want a gift letter: a short signed statement confirming the money is a genuine gift with no repayment expected and no claim over the property. Banks ask for this so they know the "deposit" isn't actually a hidden debt that changes the child's serviceability.
The risks with a gift are the ones nobody likes to raise. It offers the parents no protection: if the child later separates from a partner, gifted money sitting in a jointly owned home can end up split in that settlement. And large gifts can hit a parent's own position — under Centrelink's gifting rules you can give away $10,000 in a financial year and up to $30,000 over five years before the excess is treated as a "deprived asset" and still counted against the age pension assets test for five years. A gift is clean and generous; just go in with eyes open.
Option 2: a loan
A loan keeps the money as the parents' asset. The child repays it, on terms the family sets, and the parents retain some protection if things go wrong.
The trade-off is that a documented family loan is *debt*, and lenders may treat it that way when assessing what the child can borrow — a loan the parents expect back reduces serviceability in a way a gift doesn't. That's exactly why some families are tempted to dress a loan up as a gift on the paperwork, which is a bad idea: it misrepresents the borrower's position to the bank.
If you go this route, put it in a written loan agreement — amount, interest rate (even if it's zero), repayment schedule, and what happens on a sale or a relationship breakdown. One wrinkle: if the parents do charge interest, that interest is assessable income to them at tax time. A verbal "you'll pay us back when you can" is the version that ends up in the Family Court.
Option 3: an equity share
Here the parents don't gift or lend — they buy in. They go on the title for a share that matches their contribution, and they genuinely co-own.
This is the option that best protects the parents' money, because their stake is on the title rather than resting on trust. But it turns the arrangement into full co-ownership, with everything that entails: joint liability on any shared loan, stamp duty and potential capital gains tax on the parents' share, and the need for a proper co-ownership agreement. We walk through the whole on-title path in buying a house with your parents or siblings, and you can model the ownership split here.
An equity share is the most protective and the most involved. It suits larger contributions and families who want the arrangement to be genuinely shared and durable, rather than a favour that quietly blurs over time.
Which one should you choose?
It comes down to how much the parents want to protect their money against how much simplicity they'll trade for it. A gift makes sense when they can genuinely afford to let the money go and it won't dent their own retirement. A loan fits when they want it back and can accept that a documented debt may trim how much the child can borrow. An equity share earns its extra paperwork when the contribution is large enough that leaving it unprotected would be reckless, and when everyone is comfortable treating the arrangement as real co-ownership.
Whichever way you go, get it in writing — "we helped out, we'll sort it later" has a habit of surfacing at a separation, a death or a sale, which is the worst possible moment to reconstruct what everyone meant. A gift wants a gift letter, a loan its own agreement, and an equity share a co-ownership agreement and the right title. For that last path, Laddered keeps each person's contributions and agreed shares in one place, so a family arrangement stays legible long after the goodwill that started it.
Common questions
Is money from the Bank of Mum and Dad a gift or a loan? It's whichever you decide and document. Lenders usually want a gift confirmed in writing as a genuine gift with no repayment expected; a loan should have its own written agreement, because a loan the parents expect back can reduce how much the child is allowed to borrow.
Can parents get their money back if they gift a deposit? Not reliably. A gift offers no protection — if the child later separates, gifted money in a shared home can be split in the settlement. Parents who want their contribution protected should use a documented loan or an equity share instead.
This is general information, not legal, tax or financial advice. Gifting rules, lender policies and tax outcomes vary and change — talk to a solicitor and an accountant, and if it affects a parent's pension, a financial adviser, before the money moves.