What are the Key Conveyancing Steps for a Gifted Deposit?

Key conveyancing steps for a gifted deposit include confirming lender requirements, preparing a gift letter, completing identity and source-of-funds checks, ensuring funds are available before deposit deadlines, and coordinating with your conveyancer and broker. Proper documentation helps avoid settlement delays, finance issues, and compliance problems during the property purchase.

What Is a Gifted Deposit?

A gifted deposit is a sum of money given to a buyer—typically by a parent or close relative—with no expectation of repayment. Unlike a loan, it does not create a legal obligation to repay the funds (though lenders will want this clearly documented).

1. Confirm Your Lender’s Requirements

Before you sign a Contract of Sale, check with your lender or mortgage broker to ensure they accept gifted deposits. Most lenders in Australia do, but they will require:

• A formal gift letter or statutory declaration
• Evidence of the donor’s identity
• Proof of transfer of funds
• Confirmation that the gift is non-repayable

Some lenders may also require the donor to obtain independent legal advice.

2. Obtain a Gift Letter or Statutory Declaration

This is a critical document in the process. It typically includes:

• The donor’s details
• The recipient’s details
• The amount being gifted
• A clear statement that the funds are an unconditional gift
• Confirmation that no repayment is expected

3. Verify Source of Funds (Compliance Checks)

Under Australian anti-money laundering and counter-terrorism financing laws, all parties involved in a property transaction must satisfy strict identity and source-of-funds checks.

This means:

• The donor may need to provide identification
• Evidence showing how the funds were accumulated (e.g. savings, sale of assets)
• Clear records of how the funds are transferred

Delays in providing this information can slow down settlement.

4. Ensure Funds Are Available at the Right Time

Timing matters. Your deposit is usually payable shortly after signing the Contract of Sale. If the gifted funds are not available when required, you could be in breach of contract.

Best practice is to:

• Have funds transferred well in advance
• Ensure they are in your account (or your conveyancer’s trust account) before the due date
• Keep clear records of the transaction

5. Consider the Legal Position of the Donor

Although the deposit is a gift, it’s important to clarify expectations—particularly within families.

Key considerations include:

• The donor will generally have no legal interest in the property
• The gift does not entitle them to ownership rights
• If the buyer is in a relationship, the funds may form part of shared assets in certain circumstances

In some cases, families may wish to formalise arrangements with a separate legal agreement. Independent legal advice is recommended.

6. Review the Contract of Sale and Section 32

From a conveyancing perspective, the use of a gifted deposit doesn’t change the core contract—but it does increase the importance of careful review.

Your conveyancer will:

• Ensure deposit amounts and payment terms align with your funding structure
• Confirm there are no conditions that could put your deposit at risk
• Check that settlement timelines allow for proper fund transfer

7. Coordinate with Your Conveyancer and Broker

A smooth transaction relies on clear communication between all parties:

• Your conveyancer
• Your lender or broker
• The donor (if documentation is required)

Coordinating early helps avoid last-minute issues, especially close to settlement.

8. Understand Potential Stamp Duty and Tax Implications

In most cases, a genuine gifted deposit does not trigger tax consequences for the recipient. However:

• The donor should consider any financial or estate planning implications
• Large gifts may affect pension entitlements or future asset assessments

It’s wise for donors to seek independent financial or legal advice.

A gifted deposit can be a powerful way to enter the property market sooner—but it must be handled correctly to avoid delays or complications.

With the right preparation, clear documentation, and professional guidance, the process can be straightforward and stress-free.

Should you have more questions about gifted deposit, contact us on 03 8456 6797 or submit a contact form for faster transaction.