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Buying a house for a child
Old 06-01-2023, 02:23 PM   #1
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Buying a house for a child

We bought our daughter a dental education, ($300k), I want to play catch up with our son, and will probably buy him a house.

He is 29 and living back at home, long story short, He moved home to say good by, was planning to get married to a Canadian and move there, Covid hit, no travel, over time the engagement was called off. He's still home, and I'm enjoying it, but he wants to get out on his own.

I'm telling him it is not the time to buy, interest rates are high and house prices are high. He's doing well, saving well over 50% of his income, I'm telling him stay and keep piling up money. He has looked into apartments and it would be more than $25k a year to be on his own. I tell him hang in a couple more years. That's $50k+ more you will have.

When the time comes, I'm trying to figure out the best way to get him in a house, I could just buy the house and give it to him, I could have him get the mortgage and then we could gift him $17k or $34k a yr to pay his mortgage. I'm sure there are other options.

I'm not willing to entertain, we should not buy him a home. We want to.
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Old 06-01-2023, 02:34 PM   #2
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If I had the money and I could buy the house outright for him without jeopardizing my own financial security that is what I would do.
But Iím not financial expert.

Did you pay your daughterís tuition for dental school? Or reimburse her after the fact?
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Old 06-01-2023, 02:56 PM   #3
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I can relate to your thinking. I have something similar with DS, even though heís younger. Heís living with me to save money for a house. He has a good job and saves a lot. Unfortunately we live in a HCOL area where starter homes are 800k+ and decent homes are over a million. Itís not easy to save for a decent downpayment, not to mention dealing with higher interest rates.

Idk how itíll work out, but I encourage him to be patient and keep saving. When the time comes, I might help out with a down payment, but heís the one buying the house, so itís up to him - and his DGF - to figure out the details. Odds are theyíll have a big mortgage, but thatís ok as long as the numbers add up.

I like the idea of the gradual gifting too, but if heís financially responsible, I would see how he wants to handle buying a house and then see how you can help.
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Old 06-01-2023, 03:26 PM   #4
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We had a similar situation. Paid for one daughters education and the other daughter we bought a house. The times were definitely different. We bought the house as a foreclosure during the 2008 housing crisis. We got it cheap and put some money into it and came pretty close to what we spent on the other daughters education.

As for now, there's always arguments to be made that this is or isn't the right time to buy a house. I would start looking and see if you can find a deal. It will help both of you firm up your thoughts on what type of house and the location you're interested in.

The finances were pretty straight forward. When we bought the house we put it all three of us on the title (DW, DD and me). She was married but we were being protective of a divorce situation. Fast forward about 10 years and we signed over the house (son-in-law deserves anything he gets at this point if he were to divorce. ). The gift was the basis in the house so me and DW each gave DD and SIL the maximum gift and stayed under the gift filing requirements. You could easily do a quit claim or something to gift the house over however many years is takes.

Wishing you well. It's an exciting thing to do for your son.
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Old 06-01-2023, 04:22 PM   #5
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Personally I don't think waiting for better rates/prices is realistic. Rates went up, things slowed for a bit, but prices continue to climb in hot markets.
It's still a supply/demand issue.
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Old 06-01-2023, 04:32 PM   #6
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I see nothing wrong with your intent, but where would he buy ?
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Old 06-01-2023, 04:35 PM   #7
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Disagree with the supply and demand thing for real estate... It's location location location.

A house in 29 Palms is a lot cheaper than a house down the road in Palm Springs. Even if the same number of similar tract homes are available in each area.
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Old 06-01-2023, 04:46 PM   #8
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That's very generous of you. I would like to do the same but given where we live, that would require me to work way too long. At best $300k could be a down payment on a townhome.

I would suggest providing him the downpayment. Ideally he could get a roommate to help offset some of the costs and you could gift him the rest annually. if he is unable to obtain a mortgage on his own you could also co-sign.
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Old 06-01-2023, 08:15 PM   #9
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Originally Posted by Irishgirlyc58 View Post
If I had the money and I could buy the house outright for him without jeopardizing my own financial security that is what I would do.
But Iím not financial expert.

Did you pay your daughterís tuition for dental school? Or reimburse her after the fact?

Tuition was about $60k a year, paid twice a year. She was married while in dental school, so the wife and I each gifted $15k to her and then to her husband to pay the tuition. During her first year at one presentation, it was told that 11% of the students had not taken out loans for tuition.
She's been practicing for a year now.
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Old 06-01-2023, 08:18 PM   #10
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I see nothing wrong with your intent, but where would he buy ?

Hopefully fairly close as his job is only about 3 maybe for miles from where he is at now.
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Old 06-01-2023, 08:25 PM   #11
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Since he is already saving, why don't you contribute to his "downpayment" fund.
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Old 06-01-2023, 08:35 PM   #12
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Does $300k buy a house in your area or is that a little down payment, just curious?

Around here $300k would almost get you something decent. $300k + $150k mortgage would make for fine place.

I think it's a great idea, sure your daughter would understand, that would be my only sticking point to vet out someway.
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Old 06-02-2023, 01:19 AM   #13
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I'd pick the route that was the least complicated for his taxes.
The ongoing mortgage gift would be the lowest bracket event, if he can swing the down.
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Old 06-02-2023, 02:49 AM   #14
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Tell him there is $300k available and let him decide if he wants it and what he wants to do with it.
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Old 06-02-2023, 04:51 AM   #15
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I would involve him in the buying decision (picking the house). I would not want someone else choosing where I was going to live.
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Old 06-02-2023, 05:01 AM   #16
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We bought a small house for our 'challenged' DS and daughter-in-law two years ago. We own it and pay the taxes; they live in it rent free. We let our other, successful, DS know what we were doing which he understood and agreed to. We bought it with my IRA money. This bumped up our income so we're paying IRMAA this year.
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Old 06-02-2023, 05:02 AM   #17
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Originally Posted by SJhawkins View Post
Does $300k buy a house in your area or is that a little down payment, just curious?

Around here $300k would almost get you something decent. $300k + $150k mortgage would make for fine place.

I think it's a great idea, sure your daughter would understand, that would be my only sticking point to vet out someway.

We're in NW Florida, $300K will get you a 3bd, 2bth house with a 2 car garage.
My daughter is highly motivated, she understands she is very lucky and is grateful to be earning a high income with zero student debt. We also bought* her and her husband a repo'ed fixer upper house and gave them a two year mortgage. They fixed it up in a year and got it remortgaged. She won't have any problem.


" The house was an FHA repo. Through no problem of the kids, the closing was delayed a couple times, then the closing agency merged with another and the stopped closings until they got that all in order. So I stepped in bought the house and gave them a mortgage. They ended up with having two appraisals because of the delay, the second one was $40k higher, just while waiting to close, (hot market anyone?) She was still in dental school 400 miles away, but they just went house looking and saw this repo on a canal out to the Gulf of Mexico. The lost in the first round of bidding, then the guy that won somehow fell through and they got to bid a second time.
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Old 06-02-2023, 05:08 AM   #18
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I would involve him in the buying decision (picking the house). I would not want someone else choosing where I was going to live.

Absolutely, it is his house, his decision.



He's pretty methodical, when he was thinking about moving to an apartment, he did a spreadsheet on two different apartments adding up all the costs, to see what it would cost him per year to move out. He traded a little independence for the $25k a year it would have cost him to move out.
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Old 06-02-2023, 08:04 AM   #19
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So many variables.

First, I disagree about delaying. You can't time a market, and a homes primary purpose is to provide shelter.

Buy the house in your name, let him live their rent free, or at a minimal rent that you can gift back if needed to satisfy gift tax questions.

Establish a trust that buys the house so that it's out of your estate, and no longer a personal liability exposure.

He buys the house, you extend a mortgage and gift it over the next few years, like you mentioned.

I don't like trying to solve the "best" solution because that's a moving target grounded in your personal situation. Don't let good be the enemy of perfect.

Personally, I like the ideas of trusts as a shelter on the chance my kids marry "poorly" and avoiding the issues that come up if/when a marriage goes south. We're a few years away from it, but its on my mind.
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Old 06-02-2023, 08:53 AM   #20
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I am a big believer in making things equal for kids so giving your son 300k like you did your daughter makes sense to me.
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