3 Smart Ways to Help Kids into the Property Market
This is one of the most common goals I’m hearing from clients lately:
“How can we help the kids get into the property market… without messing up our own plans?”
If you’re setting money aside for your kids, or grandkids, it might feel responsible to leave it sitting in cash and regularly saving in a bank account.
And for short-term goals, that can absolutely make sense. But if the goal is still years away, holding large amounts in cash can quietly work against you. There’s no real growth, it loses value against inflation, interest is taxed at your marginal tax rate and over time, it could put your family further behind, not ahead.
This doesn’t just apply to saving for a house deposit. It’s a broader principle that shows up across every financial decision: cash feels “safe,” but in the long run, it can limit your options and your outcomes.
The good news? There are smarter ways to build future wealth for your family while maintaining flexibility and control.
Here are three of many strategies we’ve recently used to help clients support their kids into the property market.
Mary and Jo: Family Trust Distribution
A business family wanted to start building up funds for their adult children’s first home deposit without handing over full control. Because they already invest via a family trust, we explored ways to lend funds from the trust for a future deposit, or distribute investment income to the kids (aged 18+) where tax-effective.
Pros:
Potential to income-split with kids.
Can retain control and lend funds for asset protection.
Trust may continue after death—allowing funds to be invested and passed on later, depending on the trust deed.
Considerations:
If kids are already earning income, tax savings may be limited.
Everything is bundled together—no separation of “their” money from family wealth.
Will and Amy: Investment Bonds for Separation and Control
Another high income family wanted to save for their child’s future but keep that money completely separate from their own. We used an investment bond where earnings are taxed at a maximum of 30% (below their marginal tax rate), and if held for 10 years, withdrawals can potentially be tax-free.
Pros:
Keeps the funds clearly separate and invested for growth.
Parents/grandparents retain ownership and control.
No CGT or sale of assets if ownership is transferred to the child later.
Withdrawals may be tax-free after 10 years.
Can nominate the child as a tax-free beneficiary on death—great for estate planning.
Considerations:
Investment options are limited.
If funds are withdrawn early, tax may be payable.
Ongoing admin and fees.
Peter: Super Lump Sum Strategy
In this case, the grandparent was recently retired with surplus super and good cash reserves. We made a super contribution into a separate super fund earmarked for the future deposit. When the time comes, they’ll be able to withdraw the lump sum tax-free. Maximum tax rate on earnings while in super is 15%.
Pros:
Tax-free withdrawal from super after age 60 (this wasn't a defined benefit lump sum)
Low tax on earnings
Separate and invested for growth.
Can nominate a child as a beneficiary—though tax may apply if the child is not financially dependent at the time of death.
Considerations:
If they re-enter the workforce, access could be restricted again.
Like all investments, it carries some risk.
Death benefit tax may apply to the super lump sum if inherited by their 'grown up' kids.
Remember...
The earlier you plan, the more flexible your options and the better you can protect your own financial future while helping your family.
It’s also worth remembering that big lump sums aren’t the only way to support your kids. Some families choose to go guarantor, pay for lender’s mortgage insurance (like my dad did for me), or simply teach their kids to take small steps—starting with a modest first home, or even rent-vesting.
Want help working through the options for your family?
Let’s have a quick chat. There’s no one-size-fits-all answer—but there’s usually a smarter way.