Benefits Of Helping Your Child Buy A Home

Building Equity & Long Term Investment

Helping with mortgage payments may make more sense than providing a monthly allowance. Paying off a mortgage builds equity in the home that eventually turns into assets — usually appreciating assets.

Gifting the Down Payment

For tax purposes, parents often opt to gift their children’s money rather than paying the costs directly. The tax gift inclusion is $15,000 for each recipient and each taxpayer that year.

Potential Tax Savings for Parents

Parents who buy a home and allow their children to live in it might be able to take significant tax deductions. Property tax, mortgage interest, repairs, maintenance, and structural improvements are generally deductible on a second home.

Co-Sign a Loan

If your child cannot qualify for a large enough loan, an option is to co-sign their loan application. While this is an acceptable option with most lenders, all parties will be liable for the full indebtedness.

Planning Ahead

If your child is several years away from purchasing a home, you both have time to plan. Encouraging them to save as much as possible now may minimize how much you need to invest later.