How To Use Gifted Deposits For Off‑the‑Plan Without Tax Or Bank Drama

Buying off‑the‑plan often means tying up a big deposit well before you get the keys. For many Australians, that gap is bridged by family help. A gifted deposit can absolutely work for an off‑the‑plan purchase – but banks, the ATO and Centrelink all have rules you need to get right, and the long settlement adds extra traps.

This guide explains how banks treat gifted deposits, what counts as genuine savings, how to evidence the gift, and where the tax and family‑law landmines sit. The goal is simple: structure the gift so you can get finance approved and keep the family peace.

A gifted deposit can bridge the gap between savings and an off-the-plan contract.

1. Gifted deposits off‑the‑plan: how it actually works

A gifted deposit is money given to you, usually by parents or close family, to help fund your purchase deposit with no expectation of repayment. For off‑the‑plan, the gift might cover:

• The 10% contract deposit at exchange
• Top‑up funds closer to settlement if the valuation comes in short
• Extra cash to keep your buffers intact when rates and costs move over the 18–36 month build

1.1 Typical off‑the‑plan deposit structure

For a $800,000 off‑the‑plan unit:

• 10% deposit at exchange: $80,000
• Remaining 90% ($720,000) due at settlement, usually funded by a home loan

A gifted deposit could:

• Provide part or all of the $80,000 at exchange; and/or
• Sit in your account as additional buffer so you don’t empty every last cent.

If your parents don’t want to hand over cash straight away, they might instead back a deposit bond or bank guarantee, or release equity as explained in /insights/structuring-equity-releases-deposit-bonds-off-the-plan.

1.2 Why off‑the‑plan makes gifts trickier

Compared with a normal purchase, off‑the‑plan adds three complications:

1. Time gap – Banks re‑assess your position at settlement, often 18–36 months later.
2. Valuation risk – If the final valuation is lower than the contract price, you may need more cash or a bigger gift.
3. Policy drift – Bank and tax rules can change between exchange and settlement.

That’s why you should treat the family gift as part of a broader risk plan, not just a quick way to ‘get the deposit sorted’. The risk checklist in /insights/risk-management-checklist-mixing-guarantees-gifts-schemes-off-the-plan is worth having beside you as you read this.

2. Bank rules: when gifted funds are and aren’t OK

Each lender has its own policy, but most follow a similar pattern.

2.1 Genuine savings vs non‑genuine savings

Genuine savings are funds you have saved yourself over time – typically money held in your name in a bank account for at least 3 months.

For many lenders:

• First‑home buyers need at least 5% of the purchase price as genuine savings if borrowing above 80% LVR.
• A family gift on its own is usually classed as non‑genuine savings.

Some lenders are more flexible if:

• You have strong income and low debts; or
• You’ve been paying rent on time with a formal lease and can show a 6–12 month history.

Key idea: a gift can absolutely form part of your deposit. The question is whether the lender will accept 100% gifted deposit, or require some of your own genuine savings as well.

2.2 How much gift is too much?

Indicatively (policies change and differ by lender):

• 80% LVR or below – Many banks are relaxed if the entire 20% deposit is gifted, provided there’s a clear gift letter and your borrowing capacity is strong.
• Above 80% LVR – Most lenders want at least 5% of the purchase price in genuine savings. A 90% LVR loan on $800,000 means:
  • Minimum 5% genuine savings: $40,000
  • Remaining 5% of the deposit plus costs could be gifted.

Some specialist lenders will allow 100% gifted deposit at high LVRs, but pricing and conditions can be tougher.

2.3 Off‑the‑plan twist: re‑checking the gift at settlement

Because off‑the‑plan settlements are so far away, banks usually:

• Confirm at pre‑approval stage that the gift is expected
• Re‑check bank statements 1–3 months before settlement to see the funds actually there

If your parents were planning to drip‑feed the gift over time, this can bite. The lender wants to see the full deposit and costs available in the lead‑up to settlement, not just a promise.

2.4 Acceptable sources of gifted funds

Most mainstream lenders are comfortable with gifts from:

• Parents
• Grandparents
• Siblings (sometimes)
• Very long‑term partners or spouses

They are more cautious with gifts from:

• New partners
• Friends
• Overseas donors where source of funds is unclear

There’s also an anti‑money‑laundering (AML/CTF) overlay. Large overseas transfers may trigger extra questions or delays.

3. Evidence banks want: gift letters and money trails

To approve a loan with a gifted deposit, banks generally require two things:

1. A signed gift letter/statutory declaration; and
2. Bank statements showing the funds in your account.

3.1 What goes in a gift letter

Every lender’s form looks a little different, but most want the following:

• Full name, address and contact details of the donor
• Full name of the recipient(s)
• Relationship (e.g. parents, grandparents)
• Exact amount of the gift
• Statement that the funds are a non‑repayable gift with no interest and no security
• Statement that the donor will not obtain any ownership in the property
• Signature of the donor (sometimes also the recipient), often witnessed

Some lenders insist on a statutory declaration instead of a simple letter.

3.2 Timing: when to transfer the money

Your bank or broker will usually want to see:

• The gift in your account at least 1–3 months before settlement; and
• A clear transaction record from the donor’s account to yours.

For off‑the‑plan, that might mean:

• A smaller initial transfer to cover the 10% deposit; then
• A later top‑up closer to settlement when your full costs are known.

Just be aware that last‑minute transfers from overseas or from a redraw/offset can cause delays or extra questions.

3.3 Money trail documentation

Expect the lender to ask for:

• Donor’s statement showing the money leaving
• Your statement showing the money arriving
• Evidence that neither account is an overdraft or business facility

If the donor pulled cash from their home loan or equity release, the lender may want to see that facility too – to understand if this is really a gift or a disguised guarantee.

Banks lean heavily on a clear gift letter and clean money trail.

4. Genuine savings workarounds: rent, equity and schemes

If you don’t have the full 5% genuine savings, there are still options – especially for first‑home buyers.

4.1 Rental history as genuine savings

Some lenders accept a properly documented rental history as genuine savings, particularly when:

• You’ve been on a formal lease for at least 6–12 months
• Rent has been paid on time from your account
• The rent amount is a solid reflection of future mortgage repayments

This can work well when parents are gifting the bulk of the deposit but you’ve demonstrated good financial discipline through rent.

4.2 Government schemes and gifted deposits

If you’re using the First Home Guarantee, FHBG, or other schemes, be very careful how gifts interact with them. The companion article “Combining First Home Guarantee, FHSS and Savings for Off‑the‑Plan Deposits” in this cluster goes deep on those rules.

In short:

• Some schemes have minimum savings or contribution requirements
• Over‑gifting can accidentally disqualify you from targeted assistance
• With FHSS, you need to understand which contributions can be released and how that sits alongside a family gift

4.3 Equity releases and deposit bonds

Parents who are asset‑rich but cash‑poor might use their home equity instead of writing a cheque. That can look like:

• An equity release loan in the parents’ names, then a cash gift to you
• An equity‑backed deposit bond/bank guarantee instead of cash at exchange

The strategy and timing of these options are explored in depth in /insights/structuring-equity-releases-deposit-bonds-off-the-plan. The key is to remember that the real risk point is final settlement, not the day you exchange or lodge the bond.