helping young married children buy a home

[ProudGrandma]

So, my daughter (age 22) and her husband of the same age will be needing to find a home while her husband attends seminary for the next 4 years.  My daughter hopes to have job, but her husband (obviously) will be mostly going to school. 

Where they will be going, it appears renting an apartment is way more expensive than buying something so they are considering buying a small home.  

My main question is if you were loaning money to your kids to buy a home would you charge them interest?  (less than a bank would, but interest none the less) or would you just let them to pay you back dollar for dollar? 

I can go both ways....on one hand charging extra would teach them something but on the other hand, not charging them would give them more money in their bank account for their future. 

what would you do??

[HomeAgain]

If I were to do it, I wouldn't charge interest.

That said, I would be very hesitant to enable my child to be a homeowner with only one person possibly having the ability to have a job.  If your way of helping was to cover the entire purchase up front, that's one thing, and I might consider a clause in which a percentage of profits would be split, in addition to the cost of the home.

But two young adults, neither having a job at the moment or way of securing payment, being put in a position where they now have to deal with the costs of things like a water heater going out or repairs done or appliances going out.......I'm not sure that people living so close to the bone that they need help with the cost of a home would be able to cover these without additional loans.  And I don't know how much I'd be okay with enabling that position.

[teachermom2834]

If they are generally responsible and you want to help them out I would gift the money or loan interest free if you could afford to do so. I don’t think it is wrong if you to charge a small interest rate but I think I would not do that. 
 

I think if I felt they needed the lesson I probably wouldn’t loan at all and let someone not their parents teach that lesson. I tend to be kind of hard on my minor kids but figure once they are young adults my time for lesson teaching has passed.

I would love to be able to gift or help in some way so I think that is a great thing for you to do if you can. It is hard for young people to get started today. 

[Bambam]

I would not help with no interest. 

I might help with a minimal interest rate loan. I would draw up a contract, stating interest rate, payment schedule, etc - just like a real loan.  This can be a win-win - you will get more interest than you would on your savings (hopefully!) and they will get a bargain interest rate. 

To me, if you loaned me money with no interest, that is like charity, and as a young adult, I'm possibly a bit persnickety about being independent. A loan with interest and paperwork, that's a deal. And it sounds like I'm helping you out because you are getting more interest than you would otherwise. 

But I would also do calculations to make sure the loan was one they could afford to pay back. And I'd have to think through - what happens if they can't?  This could be a severe relationship problem if something happens. If you have any other children, will you (and can you) offer them the same sort of deal? 

I'd also consider the fact I saw an article that stated that housing prices are expected to decrease 20% over the next year. I know our newspaper reports housing prices here have went up over 55% in the last two years. So, that house that they purchase may well be worth less than they pay in 4 years? If so, who is going to eat that loss? 

And this is part of being an adult - evaluating whether to buy or rent. And with it comes some uncertainty- housing prices, maintenance, etc. Leasing is a fairly known cost with little variables. They need to evaluate whether buying a home knowing they will be there only 4 years - is that a good deal or not? 

If I thought the housing prices would be staying steady in that area or even increasing, I might be more tempted to buy the house as a rental property, and rent it to them. 

ETA: Another thought - if they have a home loan with a real financial institution, that goes on their credit report. Your family loan would not. It is useful to have good credit - cheaper interest rates, cheaper auto insurance, etc. 

Edited October 23, 2022 by Bambam

[Karen A]

20+ years ago, my in-laws gave us a loan--I think it was actually written up as a 2nd mortgage document, to pay off a large chunk of principal. At the time, my FIL, an attorney, said they needed to charge us interest to make everything legal. They charged us the very minimum, which was considerable less than our first mortgage's interest. At minimum I'd do a google search about it if you don't have a real estate attorney to consult with.

I second the caution about buying a house if one won't be staying long--there are a lot of costs in the buying and selling, maintenance, etc.

[marbel]

Will he be returning to their current place of residence when he graduates, or will they be moving again for an internship, pastoral call, or other job?  It is worth considering the cost of selling a house to move when he graduates. If they buy a house that needs work, will they be able to work on it while he is in school/she is working full time?  

(My family moved to a different state so my husband could go to seminary. We bought a house and regretted it. A house ties a couple/family down, unless they move into a house that they can reasonably expect they can sell in 4 years with minimal updating/repairs. Seminary does not leave a lot of time for working on a house. Our seminary friends who rented has a much easier time of moving on. YMMV of course!) 

[DawnM]

If you loan it with an agreement, you have to charge interest:

https://www.schwab.com/learn/story/family-loans-should-you-lend-it-or-give-it-away

Here is an excerpt:

Before you extend a loan to family, however, be aware that it's not as simple as just writing a check. The IRS mandates that any loan between family members be made with a signed written agreement, a fixed repayment schedule, and a minimum interest rate. (The IRS publishes Applicable Federal Rates (AFRs) monthly.) 

 

If you are buying something in your name for them to pay back and then put it in their name, that is different.

 

Edited October 23, 2022 by DawnM

[TexasProud]

Have they checked out on campus housing? Most, if not all, seminaries offer apartments for married students.  The ones I know at DTS and at NOTBS are SO SO SO much cheaper than the rentals around the campuses.  Just throwing that out in case they only checked out local rentals and not on campus.  Also, living on campus there are jobs the seminary could take on campus that would at least bring in a little money. Normally the jobs are extremely flexible. They don't pay all that great, but are something. 

[ProudGrandma]

17 minutes ago, marbel said:

Will he be returning to their current place of residence when he graduates, or will they be moving again for an internship, pastoral call, or other job?  It is worth considering the cost of selling a house to move when he graduates. If they buy a house that needs work, will they be able to work on it while he is in school/she is working full time?  

(My family moved to a different state so my husband could go to seminary. We bought a house and regretted it. A house ties a couple/family down, unless they move into a house that they can reasonably expect they can sell in 4 years with minimal updating/repairs. Seminary does not leave a lot of time for working on a house. Our seminary friends who rented has a much easier time of moving on. YMMV of course!) 

right, that is part of the thing....after 4 years they will be moving to a new location....but that being said, selling the house to another sem student coming in is something that apparently happens all of the time.  So...yeah...that is certainly a consideration. 

[ProudGrandma]

3 minutes ago, TexasProud said:

Have they checked out on campus housing? Most, if not all, seminaries offer apartments for married students.  The ones I know at DTS and at NOTBS are SO SO SO much cheaper than the rentals around the campuses.  Just throwing that out in case they only checked out local rentals and not on campus.  Also, living on campus there are jobs the seminary could take on campus that would at least bring in a little money. Normally the jobs are extremely flexible. They don't pay all that great, but are something. 

this particular one does not have housing for married students....just dorms for unmarried ones.  

[ProudGrandma]

9 minutes ago, DawnM said:

If you loan it with an agreement, you have to charge interest:

https://www.schwab.com/learn/story/family-loans-should-you-lend-it-or-give-it-away

Here is an excerpt:

Before you extend a loan to family, however, be aware that it's not as simple as just writing a check. The IRS mandates that any loan between family members be made with a signed written agreement, a fixed repayment schedule, and a minimum interest rate. (The IRS publishes Applicable Federal Rates (AFRs) monthly.) 

 

If you are buying something in your name for them to pay back and then put it in their name, that is different.

 

I did not know this...so I am so glad you shared this.  thanks. 

[Storygirl]

I think some families would make a loan and charge interest, and others would gift their young adults some money. DH and I would tend toward gifting instead of a loan. I think either is fine, depending on your family circumstances and perspectives.

I would just add that once they consider how much it will cost to sell the house after four years -- paying realtor commissions -- plus the upkeep of the home, it may actually still be cheaper to rent. DH and I lost money on our first few homes, even though we sold them for more than we purchased them for, because of realtor fees, so it's something to weigh into the decision.

Are you sure they can qualify to purchase a home, since he will be in school, and she doesn't have a job there yet? Or are you planning to finance the whole thing for them?

[fairfarmhand]

I’d be more likely  to buy the house and let them rent it at a lower than typical rate. 

[TexasProud]

2 minutes ago, kfeusse said:

this particular one does not have housing for married students....just dorms for unmarried ones.  

I would reconsider going there, to be honest. There are so many other seminary options that have housing options.  And yeah, he THINKS it will take 4 years. But many, many find it takes longer. Seminary is tough, at least good ones are.  The amount of work I had the one semester I attempted 12 hours was insane.  9 hours is easily full time. But SO many students I know took much longer. My degree was 66 hours.  It took me 4 years. Now granted, I was working full time the first year. But the three years I went "full time," I took 6 -9 hours a semester and sometimes 3 in the summer just to be able to balance my family responsibilities. When I started, I thought it would take me 3 years. 1 part time, then 2 years full time. 

I would reconsider the plan. 

[DawnM]

1 minute ago, TexasProud said:

I would reconsider going there, to be honest. There are so many other seminary options that have housing options.  And yeah, he THINKS it will take 4 years. But many, many find it takes longer. Seminary is tough, at least good ones are.  The amount of work I had the one semester I attempted 12 hours was insane.  9 hours is easily full time. But SO many students I know took much longer. My degree was 66 hours.  It took me 4 years. Now granted, I was working full time the first year. But the three years I went "full time," I took 6 -9 hours a semester and sometimes 3 in the summer just to be able to balance my family responsibilities. When I started, I thought it would take me 3 years. 1 part time, then 2 years full time. 

I would reconsider the plan. 

That is an interesting thought, is there another seminary that would work for what he wants?

I know Gordon Conwell has a lot of their programs online and there are others who do as well.   Or another seminary entirely.   Is it a specific denomination?   Conservative?   Moderate?   Progressive?   maybe there is an alternative.

[kokotg]

My in-laws have loaned us the money for our past two house purchases, and they've charged us the going interest rate both times. Sometimes I think it's slightly odd that they've done it that way, but they're very financially generous in other ways, and having them as our mortgage holder has been very helpful logistically (i.e. it let us buy our current house before we had a contract on our last house. And they let us "refinance" when rates were very low by just lowering our payments with no paperwork to deal with). And in our case that logistical part of the puzzle was what they were helping out with; we didn't need help to afford the house itself. Anyway, so I think it depends on the circumstances. 

[catz]

My mom partially owns my brother's current house.  Which is a long story, he and his wife originally held the mortgage, he got himself in a hole.  One thing my mom's financial advisor told her to consider is having her name tied up with the house can cause complications in certain situations.  Like in a situation of a medical emergency where she needed to move to long term care, she might have to liquidate all her assets quickly.   One thing you could do is give them a gift as a down payment if you have enough readily available for a down payment and you could ask them to gift that back when they sell if gifting our right might be difficult financially.  There can also be benefits to them having a mortgage in their name in terms of building a credit rating, etc.  

I will also say, my family's situation is complex but I would be lying if I said at the end of the day the above situation didn't affect my relationship both with my brother and my mother.  And I'm not trying to compare situations. But I have an older teen and a young adult. I am sensitive to providing help for one that we potentially couldn't provide to the other as they step more into adulthood.  I'm also sensitive to help in situations where natural consequences might be a better teacher than I could be.  I think intertwining finances can hurt relationships in some situations and I do think this can be hard with young newly married couples trying to budget together for the first time.  One thing about gifting is that you mentally let it go.  That can be harder if you're paying a mortgage for someone you feel may not be making the most responsible financial choices day to day, 

[KungFuPanda]

What’s the price difference between rent and a mortgage? For only a few years I don’t think I’d take the plunge. Houses eat money and between interest and  all the things you have to fix  it’s hard to come out ahead in that amount of time. Something always breaks and then you have to come up with a thousand dollars.  

[catz]

2 minutes ago, KungFuPanda said:

What’s the price difference between rent and a mortgage? For only a few years I don’t think I’d take the plunge. Houses eat money and between interest and  all the things you have to fix  it’s hard to come out ahead in that amount of time. Something always breaks and then you have to come up with a thousand dollars.  

That is very true.  Most sources recommend you want to plan to be in a house for at least 5 years for it to be worth the investment.  Home ownership is expensive. 

[City Mouse]

It would make more sense to me for you to buy the house in your name and charge them rent. A “loan” implies that you expect for them to pay you back. I don’t see how that would happen when one is in school full time the other not working. That could lead to hurt feeling amount other things when financial obligations are not satisfied. That is a bad way to start out a new family relationship.

Things may have changed in the 30yrs since we bought our first house, but here is how family member loans worked back then. if you loan them the money that counts toward the amount of money that a back would finance for the. For example, if they qualify for a $100,000 mortgage and you loan them $40,000 they would only qualify for the remaining $60,000 from other lending sources. If you gift them money and put that in writing, then it is not counted toward their limit. 
 

[prairiewindmomma]

I’d be really hesitant to do this without fully looking at the five year costs of doing this. I think between depreciation (I think the housing market is going to continue to correct) and realty costs, they might not break even with resale. If you are willing and able to hold this as an investment rental property after they graduate, that’s one thing, but funding a loan with good questions about payoff is…a lot of potential tension to bring into a family dynamic.

Edited October 23, 2022 by prairiewindmomma

[Arcadia]

We had more than enough for downpayment since we married late. My in-laws gifted each child a fixed amount (unadjusted for inflation). We intend to do the same for our kids. 

For your scenario, I would be thinking of buying if I can afford and then renting out to my kids at below market rate. I don’t think the banks would be willing to write a loan to your daughter and spouse unless your daughter has a stable job. Else I would just let them rent and help now and then with groceries.

[Frances]

1 hour ago, TexasProud said:

Have they checked out on campus housing? Most, if not all, seminaries offer apartments for married students.  The ones I know at DTS and at NOTBS are SO SO SO much cheaper than the rentals around the campuses.  Just throwing that out in case they only checked out local rentals and not on campus.  Also, living on campus there are jobs the seminary could take on campus that would at least bring in a little money. Normally the jobs are extremely flexible. They don't pay all that great, but are something. 

Also, campus housing can provide a wonderful community. I loved, loved, loved our time in on-campus married family housing when my husband was in grad school. And we lived there free for two out of the four years due to being RAs. I only wish we had done the same when I went to grad school before him.

[ProudGrandma]

1 hour ago, DawnM said:

That is an interesting thought, is there another seminary that would work for what he wants?

I know Gordon Conwell has a lot of their programs online and there are others who do as well.   Or another seminary entirely.   Is it a specific denomination?   Conservative?   Moderate?   Progressive?   maybe there is an alternative.

this is a specific sem for a specific denomination.  there is no changing that plan (nor would I encourage them to do so...explaining more than that would be too long and complicated here).  

What they are considering is reasonable and nice...we were just trying to decide how to handle the finances with them...thanks for all of the input.  I appreciate that. 

[gardenmom5]

depends upon financial circumstances.  mine, theirs, house prices in that area, what the mortgage cost is, how many others siblings/children are in the family who might want the same favor.

for 1ds, what we are doing is buying the house ourselves.  we will own it.  ds (and possible 2ds) will live there at a reduced rent for however long - our long-term plan is to turn it into a rental when he's done with it.  whenever that is. (it's a decent family home - or will be when it's been fixed - in a good neighborhood, but we expect he'll want something 'better' eventually.)

The house does need a lot of work - so we'll also give him a 'discount' for work he does. (he does good work and is very attentive to detail.  we'll buy materials - within reason)  - major work will be contracted out. (we've budgeted for that.)

[madteaparty]

We didn’t follow the advice of anyone 😉 and bought a house for exactly three years it took me to attend law school, knowing with 100% certainty we would be moving at the end of those three years. We were gifted the small down payment by my parents who really could not afford such a thing but they did. Anyway even selling into the last great financial crisis it ended up being fine and i returned the $ then. My goal is to do at least for my kids what was done for me. Life doesn’t always accommodate but that’s the intention.

Edited October 24, 2022 by madteaparty

[mom2scouts]

4 hours ago, kfeusse said:

My main question is if you were loaning money to your kids to buy a home would you charge them interest?  (less than a bank would, but interest none the less) or would you just let them to pay you back dollar for dollar? 

Not that I'd ever be in the position to loan my children money (most of them have higher incomes than us anyway), but if I did I wouldn't charge interest unless I needed it. As others have said, buying might not be the best plan.

[Bootsie]

If you lend them money, you must charge interest, or the interest that would have been charged is considered a gift and counts toward IRS gifting limits.  You can draw up mortgage loan documents, have the document recorded, and it can help them build credit.  Generally, the rate that you can charge them would be lower than what they could get at a bank (and higher than what you will receive depositing the money in a savings account).  So, it can be beneficial to both of you.

If you buy the house and rent it to them, then you need to charge reasonable rent, or IRS gift rules kick in.  If this is in a state with property taxes, then the home will not be your primary residence and the property tax bill will be higher than if they bought the home and received a homestead exemption.  The rent you collect from them will be taxable income to you, but you will be able to deduct some expenses as a landlord.

 

[Carol in Cal.]

What do they envision doing with the home during their vicarage year?

[plansrme]

I would not charge interest.

You do not need to worry about gift taxes unless you expect your estate to be in the many-millions (currently $16 each) in value. Even then, the value of the interest would fall under the annual gift tax exemption (meaning it never counts against the lifetime limit) because you and your husband get an allowance to each of your kiddo and her husband, so you give your daughter $16K, and your SIL $16K, and your husband does the same, and you're up to $64K/year in interest.

I get you on the cost of renting. People who haven't rented from big apartment complexes lately have no idea how they work these days. I certainly didn't before my daughter rented from one her last 2 years of college, but the fees added to base rent were insane and never-ending. 

[Carrie12345]

When you say “loan them money to buy a home”, what exactly are we talking?

 I usually think of that as contributing toward the down payment. But I’m confused as to how a couple with 1 in school and 1 hoping for a job might qualify for a mortgage.

[TechWife]

I’d either gift it or buy the house as an investment property and rent it to them to cover the mortgage. If it’s within reasonable distance of the seminary you won’t have a problem renting it out or selling it in the future. If not to a student, then to someone providing housing for furloughed missionaries or pastors and others who are taking a sabbatical to study at the seminary. 

[Grace Hopper]

4 hours ago, catz said:

That is very true.  Most sources recommend you want to plan to be in a house for at least 5 years for it to be worth the investment.  Home ownership is expensive. 

It’s not only expensive, it’s time consuming. Mow the lawn, fix the leaky sink, etc. It’s nice to have a landlord take care of that, especially when being a student. 
 

The only way I’d consider making a purchase for a short time (4 years) would be if I got a great deal in a sustained hot market, or if I would want to continue to hold the property as an investment/rental after my own kids moved out. 

[gardenmom5]

19 minutes ago, Grace Hopper said:

It’s not only expensive, it’s time consuming. Mow the lawn, fix the leaky sink, etc. It’s nice to have a landlord take care of that, especially when being a student. 
 

The only way I’d consider making a purchase for a short time (4 years) would be if I got a great deal in a sustained hot market, or if I would want to continue to hold the property as an investment/rental after my own kids moved out. 

Assuming the landlord will.   We had a lot of "make-do" when we rented because the landlord wouldn't.  a house across from us is rented - and it was a well known mediocre cheap rental in need of work cash cow for the landlord for years.

[Bootsie]

Philosophically, I would think of it this way:  If I owned a home and they were going to live in it would I charge them rent?  If I viewed it as I was foregoing rent that I could earn as a landlord, so I should charge them rent, then I would charge them interest if I loaned them money.  Basically a loan is renting money to them and the interest is the monthly rental price of money.  If they live in the house, they have to return the house to you (principal) and pay a monthly rental rate while they are using the house.  If they borrow money, they have to return the money to you (principal) and pay a monthly rental rate (interest) while they are using the money.  If I would not charge them rent to live in the hosue, and gift them the use of the house for a few years, then I would not charge them interest on a loan.  

[Jean in Newcastle]

7 hours ago, fairfarmhand said:

I’d be more likely  to buy the house and let them rent it at a lower than typical rate. 

This is what our in laws did for us when we were in seminary. I am glad that they were in a position to help us in that manner. Their generosity didn’t hurt us or cause us to be deadbeats. 

[HSmomof2]

7 hours ago, fairfarmhand said:

I’d be more likely  to buy the house and let them rent it at a lower than typical rate. 

This is what I would do as well rather than loaning them money. 

[gardenmom5]

re: IRS gift tax.  Since it's been brought up in this thread, and dh and I are buying a house in which 1ds will be living (before eventually renting) I brought this up with him.

You can gift up to $14K per year before needing to pay tax.  So, keep that in mind with calculations.

[Soror]

The In-laws loaned us money for our home when we got married. It was enough for the entire home-- granted this was 23 yrs ago, it was a starter home and we did a chunk of the work. We paid them 4% interest and had papers drawn up like an official loan. That was a great rate at the time. FIL had lost some money in a market and was looking for a guaranteed safe investment. We were thrilled with their generosity. Either way you do it will be a help to them and I'm certain much appreciated.

[TechWife]

1 hour ago, gardenmom5 said:

re: IRS gift tax.  Since it's been brought up in this thread, and dh and I are buying a house in which 1ds will be living (before eventually renting) I brought this up with him.

You can gift up to $14K per year before needing to pay tax.  So, keep that in mind with calculations.

I’d forgotten all about this. We did this when we paid off my parents’ mortgage many years ago.
It’s $16K for 2022 and $17K for 2023. In addition, if you are married, each person can give that amount and each person can receive that amount from an individual before taxes kick in. So - 

mom gives $16K to daughter 

mom gives $16K to sil

dad gives $16K to daughter

dad gives $16K to sil

Also, if you do a loan that is interest free or with a lower than market rate, the difference between the terms of the loan and the market rate can be considered a gift. 

https://www.irs.gov/businesses/small-businesses-self-employed/frequently-asked-questions-on-gift-taxes

[TechWife]

15 hours ago, TexasProud said:

I would reconsider going there, to be honest. There are so many other seminary options that have housing options.  And yeah, he THINKS it will take 4 years. But many, many find it takes longer. Seminary is tough, at least good ones are.  The amount of work I had the one semester I attempted 12 hours was insane.  9 hours is easily full time. But SO many students I know took much longer. My degree was 66 hours.  It took me 4 years. Now granted, I was working full time the first year. But the three years I went "full time," I took 6 -9 hours a semester and sometimes 3 in the summer just to be able to balance my family responsibilities. When I started, I thought it would take me 3 years. 1 part time, then 2 years full time. 

I would reconsider the plan. 

It’s not her plan to reconsider. In any case, a lot more than housing plays into seminary choice. There is a seminary not far from us and students who attend straight out of college tend to go straight through with no delays. Older students and/or students that have children take longer. 

[plansrme]

I will add that what we did for my daughter who will be in grad school for 3 years and hopes to then stay in the same area is buy her a small condo where she can live with a roommate. We will pay the mortgage and modest HOA fees while she is in school. Her roommate pays her rent, and they split utilities. At the end of 3 years, she can take over the mortgage and stay there, or we will sell it, and she can have any equity to put towards her own down payment somewhere. Even if we have no equity at the end of 3 years, it is cheaper than an apartment. With the roommate, our net monthly cost is about half what a 1 BR apartment would be, and her roommate is getting a very good deal. When we first proposed this option, she was not super excited, but as she's watched her fellow new college grads come back and try to find, qualify for and afford apartments, she's become much more appreciative.

As for constant maintenance, it's not bad. With a condo, she is not responsible for any exterior maintenance. I do take care of stuff that breaks. In fact, just yesterday I replaced a leaking toilet inlet thingy.  Just call me Plumber Mom. And we put in some much-needed insulation. But we live close, so that helps.

[TechWife]

11 hours ago, plansrme said:

I would not charge interest.

You do not need to worry about gift taxes unless you expect your estate to be in the many-millions (currently $16 each) in value. Even then, the value of the interest would fall under the annual gift tax exemption (meaning it never counts against the lifetime limit) because you and your husband get an allowance to each of your kiddo and her husband, so you give your daughter $16K, and your SIL $16K, and your husband does the same, and you're up to $64K/year in interest.

…

Estate taxes and gift taxes are two different things. 

[plansrme]

 

2 hours ago, TechWife said:

Estate taxes and gift taxes are two different things. 

Yes, but the lifetime gift tax exclusion, which is assessed at death, determines whether the amount is ultimately taxed. I am a tax attorney; I am not making this up. Dave Ramsey has a good explanation here. The fact is that until you get into tens-of-millions of dollars in your estate, the gift tax implications are nonexistent.

[Happy2BaMom]

Mixing family & money is one of the most complicated things once can do. It sounds like you want to support your DD & husband. That's wonderful. I'd be cautious of my assumptions going into it....planning to sell to another seminary student assumes there will still be more demand than supply in 4 years time, and that prices will at least remain the same or go higher. Those are big assumptions. I'd try to have a plan/clarify first how the situation will be handled if the house can't be sold, or ends up with an underwater mortgage.

I am also one who'd be more likely to buy the house & rent it back to them, or give them a down payment, with that money coming out of whatever future estate we hope to have, but I just don't like the expectations that are built into a loan. And I'd make it clear to my other kids that our will will be reflecting that. As others have noted, it can/will really impact other familial relationships if more financial support is given to one child than the other(s).

[QueenCat]

18 hours ago, fairfarmhand said:

I’d be more likely  to buy the house and let them rent it at a lower than typical rate. 

That is what we'd likely do too. 

[lmrich]

Also - do you have other children? Are you able to do the same for them? 

 

[TravelingChris]

6 hours ago, gardenmom5 said:

re: IRS gift tax.  Since it's been brought up in this thread, and dh and I are buying a house in which 1ds will be living (before eventually renting) I brought this up with him.

You can gift up to $14K per year before needing to pay tax.  So, keep that in mind with calculations.

No it was raised to 15K and that is per adult, so technically last year, we were able to help dd2 and dsil2 with over 15k--  15K from me, 15k from dh, and that could have been up to 60K altogether because each of us could give 15k to dd2 and another 15k for dsil2,    (We actually helped them probably around 18k altogether.) Also I read it was changing to 16k too- not sure if that was for this year or next year.

[catz]

You can gift to 16K in 2022 (and you and a spouse can each gift that to one person).  This also says there is a lifetime gift ceiling of 12M, so maybe this won't ever be an issue for most people!

https://turbotax.intuit.com/tax-tips/estates/the-gift-tax-made-simple/L5tGWVC8N

[popmom]

On 10/23/2022 at 4:38 PM, catz said:

That is very true.  Most sources recommend you want to plan to be in a house for at least 5 years for it to be worth the investment.  Home ownership is expensive. 

There are many factors to consider. You can mitigate some of this by doing a 15 yr instead of 30 yr term. Also, depends on how much they are putting down. But--yeah, I agree with you. We have learned the hard way. 

 

Edited October 24, 2022 by popmom