Lending a Helping Hand

Fall 2011

With mortgage interest rates exceptionally low, a surplus of bargain-priced real estate on the market, and an economic climate that makes it particularly tough for young people to truly strike out on their own, many parents with considerable wealth are contemplating buying a home for their adult child.

Purchase Home

There are a number of circumstances in which buying a home for an adult child may be positive for all family members. It’s a way to help a young adult who perhaps otherwise couldn’t afford to start a career in a city like New York or San Francisco. Indeed, there may never be a comparable time when it may be possible to buy at a reasonable price in the most expensive markets. If the family opts to keep the house past the child’s use, it may be a wise long-term investment.

For most high and ultra-high net worth families, finances aren’t the aspect of the decision that should be weighed first. Usually, the issue that demands consideration up front is how such a move fits with the values parents and grandparents want to communicate to younger generations. Successful families tend to communicate their family values explicitly—and frequently—to their youngest members.

“There are a number of circumstances in which buying a home for an adult child may be positive for all family members.”

The gift or loan of something as large as a first home, or even a substantial down payment toward one, needs to fit with the other messages parents and grandparents are trying to send. Would it be the puzzle piece that allows a passionate, committed young person to move out into the world? Or would it inadvertently enable a directionless adult child to remain rudderless?

Should you decide that helping an adult child secure a home is a healthy part of your plans, it is important to sort through your options with your wealth management team and structure any transaction to take full advantage of potential tax benefits or investment opportunities.

Banking & Credit


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