The Bank of Mom & Dad – How to help your kids buy their first place
I hope that you’re sitting down for this… but real estate in Vancouver is expensive these days. It also seems as though the rate at which people can save for a down-payment, can barely keep up with the rising cost of real estate. So how can mom and dad help their kids? There are few options that you (as mom and dad) can consider. One would be simply to gift your children assets/money from your savings/portfolio. There are no tax implications for doing this, though you will effectively be giving up control of the asset/money. Another option would be to set up a joint investment account with your kid(s). This way, mom and dad can deposit money into the joint investment account, and the kids can use any portion of the cash in the account for their down-payment. Perhaps your kids don’t need help with a down-payment, but they do need help qualifying for a mortgage loan, In this case, mom and dad can either act as a guarantor on the mortgage, or they can co-sign the mortgage with their kids. In today’s market, the bank of mom and dad has never been more important, and if you are planning on helping your kids with their first home purchase, you should certainly consider the aforementioned strategies. If you’d like to know more about the specifics of any of the strategies, please let us know and we would be happy to help.
Written by:
Jon Glougie, CFP®, CIM®
Associate Portfolio Manager
Luft Financial, iA Private Wealth
