Ask Paul: Should I swap townhouses to keep my mum happy?


Dear Paul,

My partner and I own a townhouse in the same complex as my mum. My mum prefers ours and wants to sell hers and buy ours for the same price.

Ours is more valuable and desirable, to the tune of about $50,000.

ask pauk clitheroe should i swap townhouses to keep my mum happy

Is there any way that we can let her live in ours and we rent hers out, without affecting her pension, and keep ownership of our place?

Market rent would only just cover our loan, but we would like to keep our place if possible.

If not, will we have to pay stamp duty to transfer the properties into each other's names? Or are we better off just selling ours to my mum to keep her happy in her old age?

Crikey, Ann, I am not overly keen on any of this. Your mum may well prefer your more valuable home, but is that the best reason to hand it over?

I can add a bit of logic here. If your mum lives in yours and rents hers out, the value of her old home will be included in the pension assets test and the rent in the income test. This may lead to a very poor outcome for her.

Then you could, of course, sell hers and then she could buy yours as her home for the amount she gets. This should not impact her pension, but I would strongly encourage you to get a solicitor to draw up a legal agreement between you to protect the $50,000 you are, in effect, giving her.

Equally, exactly where will you live? I know you will have the cash value of your place, less the $50,000 more it is worth. Presumably you would pay the selling costs on your property. You would also receive the proceeds of your mum's sale, less selling costs? Then what happens? You trot off with the money you have after costs and buy another place, paying stamp duty on the purchase?

Ann, you are a beautiful daughter who is clearly willing to sacrifice quite a bit to please your mum, and your partner is also being very considerate. Please forgive my bluntness, but this sounds like a tale from La La Land.

I can't imagine that vast a difference in the two townhouses. Can't you both just stay where you are? While it makes absolutely zero logical sense, if this is a critically important "mum relationship saver", I guess you let emotion override logic and go with it.

But do have a lawyer draw up an agreement to cover your costs and loss of value in the very strange transaction.

Again, please excuse my bluntness. You are proposing to be very kind to your mum, which is lovely. I do note your exasperation in your comment to "keep her happy in her old age". I'd be trying to communicate with your mum to get a better outcome.

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Paul Clitheroe AM is founder and editorial adviser of Money magazine. He is one of Australia's leading financial voices, responsible for bringing financial insight to Australians through personal finance books, the Money TV show, and this publication, which he established in 1999. Paul is the chair of the Australian Government Financial Literacy Board and is chairman of InvestSMART Financial Services. He is the chair of Financial Literacy at Macquarie University where he is also a Professor with the School of Business and Economics. Ask Paul your money question. Unfortunately Paul cannot respond to questions posted in the comments section. View our disclaimer.
Patrick Hockey
June 28, 2023 4.45pm

First world problems :(

Chris Veraa
June 28, 2023 4.53pm

I think Ann is saying that she owns a rental property in the same complex where her mum lives... it is not her PPOR.

Ian Blayney
June 28, 2023 10.14pm

Maybe just swap places if you want to keep her happy? If allowed. Leave ownership as is.

Maybe this is a cry from mum for a bit more attention?

Deborah Thurstun-Morcom
July 7, 2023 4.24pm

I think this is a terrible idea and think your mother is selfish as you two are loosing with costs, home and impact your relationship, as a parent I would never make my children worst off - quite the opposite.