I am a self-funded retiree and widowed. I am considering selling my home and downsizing. As part of this process I am thinking of using some of the proceeds to pay out my son’s mortgage. Are there any tax or other financial pitfalls I should be aware of in doing this, either for me or for my son?

When you describe yourself as self-funded, I assume there are no age pension or Centrelink issues to consider. If the property you are selling has been your principal place of residence, it should be exempt from capital gains tax. There are also no death duties or similar taxes payable on gifts made during your lifetime.

If you’re gifting money to your children, ensure you don’t have need of it first.Credit: Simon Letch

The more important issues are practical rather than tax-related. First, you need to be confident that giving away a substantial portion of your assets will not compromise your ability to support yourself for the rest of your life.

Second, careful thought should be given to whether the money provided to your son is intended to be a gift or a loan. That decision should consider his financial circumstances, whether he has a partner, and whether there are children involved. The right approach will depend on those factors and on how you wish to balance family support with protecting your own financial security.

Can you explain how a holiday house worth about $900,000 would be assessed for the age pension? We own our home, have shares worth about $30,000 and have $610,000 in........

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