Giving kids a down payment

[Anonymous]

Anonymous wrote:Only if and when it fits into bigger financial plan for them and I guess for me too. Right now it doesn't, because renting is cheaper.
If he wants to kill money in real estate, he can do that with his own money, not mine.
This need to buy a home will not come from my boys any time soon. It may come from family members, partners, and other well-meaning people who don't know our whole financial picture and goals. Nothing that math and little common sense can't fix.
Younger kid is getting an inheritance at 18. We are letting it grow for decades. Home equity is not the place for it, but as it's not my money, who knows what he will do.
At 18, both are already set to do well on their own. They'd be a little confused why the $100k suddenly which should be in the market as part of family money.

Put another way...why does a kid buying a house get $250k from you, while the kid that wants to sensibly invest the $$$s in the stock market and rents gets $0 (I guess)?

I don't understand this idea that you will pay for discrete things and then possibly favor one child over the next vs. just set up trusts or something and give your kids $$$s.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:People here really love to humble brag about their wealth. Tone deaf, especially when so many people are struggling right now.

What an idiotic comment. Are you seriously saying bc someone can’t ask a question relevant to their situation bc others are worse off? A rising tide lifts all boats - the more successful I am, the more people I employ, taxes I pay, donate, etc. If a gift of a down payment can help someone get on the property ladder and move up, why not? OP, talk to your estate planner or wealth manager bc we were specifically given an amount we can “give” to each child annually w/o tax consequences. Each child has an account that is set up tax efficiently and will eventually be used for a down payment.

This---It's currently 19K/year. But you each give your kid that, and also each gift their SO/Spouse the same, and same for once they have kids.

Sigh, the same incorrect info, repeated again and again. You give whatever you want to your kids and not have to pay any taxes on it, as long as it doesn't total up to $14 million+ over the course of their lifetime (including from your estate, I think), and then you only start paying taxes on it on the amount over $14 million.

If you give someone more than $19k in a single year, you do have to fill out an IRS form that tracks what you are giving them each year. But you don't pay taxes on it.

And also, if you stay under $19k/year, you not only don't have to fill out the form, you don't have to include it in the $14 million lifetime number. It's the annual exclusion from that calculation.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This board is insane sometimes. Idk a single person whose parents helped them buy a house

really?

Im in my 40s- live in DC and I dont know a single person who bought a house without some family help, either living rent free with the parents for a few years, a loan, , shared equity in the home, or just a gift from either parents or wealthy siblings who gave a loan.

Similar except early 30s in Arlington. We are the only ones who bought without family help and I guess we even got help cause we used the $25K we got for a wedding on our closing costs (since you can’t really have a proper wedding for $25K in this area unless you do it in your backyard or a public park).

Yes I certainly know people who got family help. But also know people who didn't. I guess it depends on where you live- I suspect those making these statements live in places where houses are $1.5 million+. Not all of DC (or even Arlington) is like that, but those people would probably never look at those parts of DC or Arlington to buy/live.

[Anonymous]

Anonymous wrote:Is the child married? If the marriage breaks up, are you comfortable with the spouse keeping half?

Ya, rather than interfering with them buying a home together as a couple, or your child losing your gift to a divorce, instead of giving them money earmarked for a home purchase, put the bulk of any money you want to provide them in a trust for them, and give them annual gifts as you desire.

[Anonymous]

I will match whatever they can save for a down payment. I think this helps them still feel invested, like they earned it. Kids who constantly are just given handouts do not appreciate them imo. So this is helping them get a leg up, but not leaving them totally off the hook.

[Anonymous]

I was planning to give 100k to each kid. I have two. But one lives in a much more expensive state so I may have to give more like 200k. I wish I could give more to both but that's about my limit.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This board is insane sometimes. Idk a single person whose parents helped them buy a house

really?

Im in my 40s- live in DC and I dont know a single person who bought a house without some family help, either living rent free with the parents for a few years, a loan, , shared equity in the home, or just a gift from either parents or wealthy siblings who gave a loan.

Similar except early 30s in Arlington. We are the only ones who bought without family help and I guess we even got help cause we used the $25K we got for a wedding on our closing costs (since you can’t really have a proper wedding for $25K in this area unless you do it in your backyard or a public park).

Yes I certainly know people who got family help. But also know people who didn't. I guess it depends on where you live- I suspect those making these statements live in places where houses are $1.5 million+. Not all of DC (or even Arlington) is like that, but those people would probably never look at those parts of DC or Arlington to buy/live.

I don't know definitively about my neighbors in Upper NW DC...but I strongly doubt any had significant family help buying their homes hearing some of their back stories (they will mention growing up middle class or equivalent or mention that they are actually helping support their own parents). I am older but had no family help either.

Many of the new buyers are dual-income BigLaw senior associates or partners in their mid-to-late 30s, or similar dual-professional type jobs. It really doesn't seem like they were stretched to come up with $400k for a downpayment just on their incomes and savings.

[Anonymous]

Anonymous wrote:I was planning to give 100k to each kid. I have two. But one lives in a much more expensive state so I may have to give more like 200k. I wish I could give more to both but that's about my limit.

But how would you feel if your kid's spouse divorces them 5 years after your gift and keeps half of it?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We're hoping to be able to do this for one child because we paid for grad school for the other. The problem is that one of us has a diagnosis that typically leads to very expensive long-term care. So we're not at all sure we can be handing over six figures.

You shouldn't---you should be saving/focused on your LTC

We know. We have several million dollars, though, and the other person has LTC insurance. So even if the one of us with the chronic conditions depletes a couple million in care costs, we'll still have a couple left plus the LTC for the other partner. Believe me, it won't be handed over unless we can handle it. Just food for thought for others who may not have considered a surprise diagnosis at this time of life.

Agreed! You should not hand your adult kids large amounts until your are 100% set for retirement and old age and that includes assuming 3-5+ years of LTC/care for a major medical reason. You might not need it but if you do you want to be ready

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:People here really love to humble brag about their wealth. Tone deaf, especially when so many people are struggling right now.

What an idiotic comment. Are you seriously saying bc someone can’t ask a question relevant to their situation bc others are worse off? A rising tide lifts all boats - the more successful I am, the more people I employ, taxes I pay, donate, etc. If a gift of a down payment can help someone get on the property ladder and move up, why not? OP, talk to your estate planner or wealth manager bc we were specifically given an amount we can “give” to each child annually w/o tax consequences. Each child has an account that is set up tax efficiently and will eventually be used for a down payment.

This---It's currently 19K/year. But you each give your kid that, and also each gift their SO/Spouse the same, and same for once they have kids.

Sigh, the same incorrect info, repeated again and again. You give whatever you want to your kids and not have to pay any taxes on it, as long as it doesn't total up to $14 million+ over the course of their lifetime (including from your estate, I think), and then you only start paying taxes on it on the amount over $14 million.

If you give someone more than $19k in a single year, you do have to fill out an IRS form that tracks what you are giving them each year. But you don't pay taxes on it.

And also, if you stay under $19k/year, you not only don't have to fill out the form, you don't have to include it in the $14 million lifetime number. It's the annual exclusion from that calculation.

Sorry, yes some of us think that way because the $14m (going to 15 next years) is/will be an issue. So gifting yearly max is one way to reduce the estate taxes
. And our state estate taxes start way lower

[Anonymous]

Anonymous wrote:Has anyone done this or are planning to? How much? We’re thinking of giving 100k to each kid. College is already done and paid for. Does 100k help enough or should we give more?

Are they currently trying to get a house? Or are you giving them this money in advance? If the latter, are there clear "rules" in place about the funds? Or do you literally not care what happens to it?

If you give them $100K and they go spend it on booze/drugs & gambling and have nothing to show in 6 months, are you OK with that?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:we set up brokerage accounts for our kids many years ago. each of three kids have about 300k right now. they can use it anyway they want. we are not giving any more or paying for their wedding. we are done

Our two have similar balances but we've told them it's for a downpayment. We'll contribute to weddings when the time comes, hopefully in the next 5-10 years. Otherwise, we are done with direct contributions. We plan to take them along on family vacations as long as they'll go with us.

pp you are responding to. your approach is similar to our approach. not paying for wedding is not money issue for us. we want them to be able to pay for themselves - "if you can't pay for your own wedding, you are not ready to get married" is our message. we stopped funding their accounts but rethinking whether we should restart.

This is very odd to me but to each their own I guess.

That’s a good way to not end up with grandkids.

[Anonymous]

We have four kids. We’ve paid for college and grad school for all, nice weddings for the three who got married, and yes provided down payment assistance to the ones who bought houses. In one instance, we even set up a private mortgage for one of the kids—where we were the lender—because they had just got out of college and landed a nice job and a great condo had just gone on the market at a good price right where they were going to work. They had the qualifying income but hadn’t been working long enough to qualify for a bank loan. A year or two later they refinanced and got a bank loan and paid us off.

The point is, you do what you can and adjust to the circumstances. Giving each kid a set $100k amount for a “down payment” is stupid—you wait and see what the actual need is and help then. And when doing it you don’t keep score.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I was planning to give 100k to each kid. I have two. But one lives in a much more expensive state so I may have to give more like 200k. I wish I could give more to both but that's about my limit.

But how would you feel if your kid's spouse divorces them 5 years after your gift and keeps half of it?

Easy enough to write into a prenup.

[Anonymous]

Anonymous wrote:We have four kids. We’ve paid for college and grad school for all, nice weddings for the three who got married, and yes provided down payment assistance to the ones who bought houses. In one instance, we even set up a private mortgage for one of the kids—where we were the lender—because they had just got out of college and landed a nice job and a great condo had just gone on the market at a good price right where they were going to work. They had the qualifying income but hadn’t been working long enough to qualify for a bank loan. A year or two later they refinanced and got a bank loan and paid us off.

The point is, you do what you can and adjust to the circumstances. Giving each kid a set $100k amount for a “down payment” is stupid—you wait and see what the actual need is and help then. And when doing it you don’t keep score.

So if a kid mismanages everything about life and constantly needs $2-3k per month to live you provide it? And they are not disabled/special needs or any reason they cannot be highly successful.
What if the other kids are responsible adults, do well in college and have great jobs. Do those kids also get $2-3k per month or since they can manage themselves they don't get much?

It's a great way to setup anger amongst the kids.

Now I do get, if you agree to provide for grandkids college, nobody gets more or less--each grand kid should get the same amount and mom and dad don't get extra for not having as many or any kids.

But beyond that, you give equally. If one gets $50k for a wedding and 40k for a down payment, then any others should also get $90k, and still get it if they don't have a wedding