How best to help daughter purchase a house

down2earth

down2earth

Member
My 30-year-old single daughter has a great job, but can't qualify for a mortgage on a home she's picked. In order to avoid a huge tax penalty (gift tax) or probate issues, can I
1.) Loan her the money to purchase the home and have her pay me monthly rent?
2.) Buy the home myself and put her on the deed as co-owner (and beneficiary)
3.) But the house in my name and transfer the title to her down the road?
She will eventually inherit the home as sole beneficiary. I'm just trying to make this as simple as possible. Thanks for your help.
 

It sounds like you have similar rules to the UK.. or clauses... sadly I'm no financial wizard so I can't tell you what would be the better option

My daughter bought her first home at 23 with no help from me.. however if I found myself in your position, I would be tempted to buy the house myself and add her to the Deeds.. but that could be the wrong answer, as I say I don't have a financial head..
 

down2earth said:
My 30-year-old single daughter has a great job, but can't qualify for a mortgage on a home she's picked. In order to avoid a huge tax penalty (gift tax) or probate issues, can I
1.) Loan her the money to purchase the home and have her pay me monthly rent?
2.) Buy the home myself and put her on the deed as co-owner (and beneficiary)
3.) But the house in my name and transfer the title to her down the road?
She will eventually inherit the home as sole beneficiary. I'm just trying to make this as simple as possible. Thanks for your help.
Click to expand...
I'm in the U.S.
 
down2earth said:
My 30-year-old single daughter has a great job, but can't qualify for a mortgage on a home she's picked. In order to avoid a huge tax penalty (gift tax) or probate issues, can I
1.) Loan her the money to purchase the home and have her pay me monthly rent?
2.) Buy the home myself and put her on the deed as co-owner (and beneficiary)
3.) But the house in my name and transfer the title to her down the road?
She will eventually inherit the home as sole beneficiary. I'm just trying to make this as simple as possible. Thanks for your help.
Click to expand...
You are generous to be considering this, you have a lucky daughter.

I have done it a couple of ways, I once loaned the money and set up mortgage payments through a mortgage service company. They took care of all the paperwork for a small fee, and it made the whole thing feel like a more arm's length arrangement. I have also given money for down payments, makes getting the mortgage from a bank easier. In the US we can give up to something like $12k/yr, maybe more now, without gift taxes, I just set the loan payment for the down payment up and forgave the maximum allowable every year.

Best of luck with it, you are a good Mama!
 
IMHO by age 30 she should be fully independent of her parents, able to live and survive on her own.
"Neither a borrower, nor a lender be. For loan oft loses both itself and friend. And borrowing dulls the edge of husbandry.” Wm Shakespeare, Hamlet
 
I think it would be best for you to consult an attorney.
@sch404 The OP states her daughter "does not qualify for a mortgage". That is the reason she's trying to help! Unfortunately, women find out too late, and some not at all, that they need to establish a good credit rating. And she's not a "friend"...that's her child! I would do whatever I could to help my child without causing financial problems for myself (as long as the child was not an ingrate).
 
OneEyedDiva said:
I think it would be best for you to consult an attorney.
@sch404 The OP states her daughter "does not qualify for a mortgage". That is the reason she's trying to help! Unfortunately, women find out too late, and some not at all, that they need to establish a good credit rating. And she's not a "friend"...that's her child! I would do whatever I could to help my child without causing financial problems for myself (as long as the child was not an ingrate).
Click to expand...
Shakespeare's wisdom obviously applies equally to friends lovers and relatives. I have always felt the main job and responsibility of being a parent is to teach my children not to need me, not to depend on me anymore after the age of maturity or after they have received their formal education by being continuously enrolled in school or college and receiving a degree or certificate therefrom. I have two grown children, a boy and a girl and 4 grandchildren. While we love them deeply, our kids know better than to EVER ask their mom or me for money or financial assistance! BTW, both our kids are homeowners. They bought what they could afford themselves and they never even told us they did this until after the fact...The daughter of the OP sounds like she wants something she simply cannot afford on her own and that is not IMHO a good situation at all!
 
Personally (NOTHING legal about my answer at all because I don't know the right way to go about it) I would want to make sure my daughter always has a home, so I'd buy it myself and have her as co-owner probably turn the whole thing over to her in a little while. Since anything I have will eventually be her inheritance, I'd put as much cash on it as possible. If she'd want to, she could pay rent to me. Most likely someone will tell me why that may not be a good idea, but I only have one child and there's no way I'd turn into a stingy old :poop: about not letting her have part of her inheritance early in the form of a home.

EDIT: Re-reading the original post, I have a question that may change my mind... I read it to say she didn't qualify for "a" mortage... but it doesn't really say that. Is it just some fancy schmancy house she doesn't qualify for? If so, I'm changing my answer because she should be advised to look for something more reasonable.
 
Alligatorob said:
You are generous to be considering this, you have a lucky daughter.

I have done it a couple of ways, I once loaned the money and set up mortgage payments through a mortgage service company. They took care of all the paperwork for a small fee, and it made the whole thing feel like a more arm's length arrangement. I have also given money for down payments, makes getting the mortgage from a bank easier. In the US we can give up to something like $12k/yr, maybe more now, without gift taxes, I just set the loan payment for the down payment up and forgave the maximum allowable every year.

Best of luck with it, you are a good Mama!
Click to expand...
I did the same.
 
sch404 said:
Shakespeare's wisdom obviously applies equally to friends lovers and relatives. I have always felt the main job and responsibility of being a parent is to teach my children not to need me, not to depend on me anymore after the age of maturity or after they have received their formal education by being continuously enrolled in school or college and receiving a degree or certificate therefrom. I have two grown children, a boy and a girl and 4 grandchildren. While we love them deeply, our kids know better than to EVER ask their mom or me for money or financial assistance! BTW, both our kids are homeowners. They bought what they could afford themselves and they never even told us they did this until after the fact...The daughter of the OP sounds like she wants something she simply cannot afford on her own and that is not IMHO a good situation at all!
Click to expand...
Congratulations on doing such a good job of raising independent, successful children. Different sets of parents have different methods and boundaries when it comes to raising their children. I would never tell you that yours was wrong because obviously it turned out well. But there are many, many parents who gladly give their children a helping hand (whether requested or offered) and they aren't wrong either, unless like I said, their children are ingrates or feel entitled. I will add that it's not a good idea if their children ask for help over and over without moving toward becoming more self sufficient.
 
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OneEyedDiva said:
Congratulations on doing such a good job of raising independent, successful children. Different sets of parents have different methods and boundaries when it comes to raising their children. I would never tell you that yours was wrong because obviously it turned out well. But there are many, many parents who gladly give their children a helping hand (whether requested or offered) and they aren't wrong either, unless like I said, their children are ingrates or feel entitled. I will add that it's not a good idea if their children ask for help over and over without moving toward becoming more self reliable.
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Thank you for that Ms Diva. Very well said. I guess my wife and I are very 'old school' when it comes to such matters as helping our children. Of course we are always ready and willing to help our kids through any of life's exigencies, emergencies. health circumstances, job losses or other untoward events that may come their way. And we even did that with our son a few years out of college when he had ended up working in the Bay area for a small risky company that couldn't make payroll anymore. So we loaned him several thousand dollars so he could make rent until his company finally got bought out. Our son paid us back almost immediately as soon as his new company started paying him. To my wife and I there is a very fine line between 'helping' those we love and care about and 'enabling' them to make poor decisions and learn how to become dependent on other people to obtain what they want in life.
 
FYI
In the US, in 2023, you can give a gift up to $17,000 in one year without any consequences. Your wife can also give another $17,000
in 2023 without consequences. Then in 2024 you both can give the same gifts to the same person. We did this a couple of years ago.
 
I would be hesitant to attach your name to it in any way, to many possibilities that could come back and bite you. Considering she doesn't qualify for a mortage is concerning, I know you want to help her but your financial help could easily over extend her.

My suggestion would be let her buy what she alone can afford. Then you can start helping with renovation cost and pay for materials or contractors directly. That way she can avoid paying gift taxes on the money and you get the satisfaction of helping her have a better home.
 
sch404 said:
Thank you for that Ms Diva. Very well said. I guess my wife and I are very 'old school' when it comes to such matters as helping our children. Of course we are always ready and willing to help our kids through any of life's exigencies, emergencies. health circumstances, job losses or other untoward events that may come their way. And we even did that with our son a few years out of college when he had ended up working in the Bay area for a small risky company that couldn't make payroll anymore. So we loaned him several thousand dollars so he could make rent until his company finally got bought out. Our son paid us back almost immediately as soon as his new company started paying him. To my wife and I there is a very fine line between 'helping' those we love and care about and 'enabling' them to make poor decisions and learn how to become dependent on other people to obtain what they want in life.
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Your welcome Sch and thank you for the saying my reply is well written. I'm glad to read that you helped your son when he needed it most. I've done the same for my son. Regarding your statement:
"To my wife and I there is a very fine line between 'helping' those we love and care about and 'enabling' them to make poor decisions and learn how to become dependent on other people to obtain what they want in life"
We are definitely on the same page about that.
 

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