Should You Help Your Adult Children Buy a Home?
Instead of passing on an inheritance, giving your children cash to buy a home can be a smart move — as long as you’re not jeopardizing your own retirement.


The post-pandemic spike in home prices, elevated mortgage rates and persistently rising costs have made paving a strong financial foundation feel increasingly out of reach for many young people. With the transfer of wealth barreling ahead, some parents and grandparents are looking for ways to help ease some of the cost burdens associated with buying a home, rather than waiting to pass wealth to heirs later on.
This generous gesture still needs to be carefully considered and strategic, since not all families are in a financial situation to part with large portions of their retirement savings if their principal investments are maintaining cash flow. Financial support is very much like the airplane safety instructions you receive before takeoff — always put your oxygen mask on first before assisting others.
Tax and mortgage implications
Homeownership is fast becoming a difficult milestone for young adults. In a supply-constrained housing market, all-cash home purchases have become increasingly common. According to the National Association of Realtors, homebuyers who paid cash accounted for 32% of home sales in January, marking the highest rate since 2014. Many buyers bring in equity from previous homes, making it more challenging for first-time homebuyers to compete.
Based on your net worth, you could end up with more money in retirement than you could ever spend.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
In these scenarios, it can be easier to part with a down payment or lump sum of cash for a family member to use for a home purchase. However, gifting funds over a certain amount can have considerable tax implications for you and the recipient and, in some cases, may not be allowed by mortgage lenders. That’s why it’s important to think about and plan for an allocation of cash, or other ways to relieve a financial burden, in advance.
Strategy one: Selling assets
Many of the clients I work with are accustomed to saving and have been tucking money away for most of their lives to live comfortably in retirement. This mindset is still important, but for many fortunate retirees, their savings far eclipse their estimated financial need. This has allowed us to explore real-time gifting strategies to help relieve some of the pressures that first-time homebuyers are facing, especially in some hot markets like the Washington, D.C., area.
If your investment portfolio is strong, you may consider raising cash by selling some of those assets to provide the necessary funds for a down payment and closing costs. While this approach may incur capital gains taxes, it can be a straightforward way to generate cash and get started.
Strategy two: A securities-based loan
If you prefer to avoid selling your investments due to the risks involved, you might consider taking advantage of a securities-based loan. This type of loan allows you to borrow against the value of your investment portfolio. With this option, you can maintain your investment portfolio with no immediate tax liability; but if the value of your portfolio decreases significantly, you may be forced to sell or add cash to maintain the loan.
Generally, this can be a solution in a shorter time frame, so if the intent is for the child to make an all-cash offer and then get a mortgage and pay you back, borrowing against your investment portfolio may be an efficient choice.
Get expert advice
Each of these approaches can help the next generation gain a solid financial footing. By leveraging thoughtful strategies for assisting with a home purchase, you can make a significant impact on their future with an investment in an appreciating asset.
It is wise to consult with a financial adviser and tax professional to tailor these approaches to your unique situation so you are not jeopardizing your own stability. With careful planning, you can empower the next generation to build a financially prosperous future.
Investment and insurance products offered through RBC Wealth Management are not insured by the FDIC or any other federal government agency, are not deposits or other obligations of, or guaranteed by, a bank or any bank affiliate, and are subject to investment risks, including possible loss of the principal amount invested.
RBC Wealth Management does not provide tax or legal advice. All decisions regarding the tax or legal implications of your investments should be made in connection with your independent tax or legal advisor. No information, including but not limited to written materials, provided by RBC WM should be construed as legal, accounting or tax advice.
Securities-based loans involve special risks and are not suitable for everyone. You should review the provisions of any agreement and related disclosures and consult with your own independent tax and legal advisors about any questions you have prior to using securities-based loans or lines of credit. Subject to credit approval. Additional restrictions may apply. Lending services may be offered by bank affiliates of RBCWM-US. RBCWM and/or your advisor may receive compensation for offering or referring these services. RBC Wealth Management, a division of RBC Capital Markets, LLC, registered investment adviser and Member NYSE/FINRA/SIPC.
Related Content
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Ann Marie Etergino leads a team of advisers with a focus on customized, comprehensive wealth management solutions. With 40 years in the industry, she guides clients through life’s financial complexities, aligning their resources with their goals. Known for her empathetic approach, Ann Marie is especially attentive to the unique challenges faced by women and addresses multifaceted needs with insight and compassion.
-
Stock Market Today: Have We Seen the Bottom for Stocks?
Solid first-quarter earnings suggest fundamentals remain solid, and recent price action is encouraging too.
By David Dittman
-
Is the GOP Secretly Planning to Raise Taxes on the Rich?
Tax Reform As high-stakes tax reform talks resume on Capitol Hill, questions are swirling about what Republicans and President Trump will do.
By Kelley R. Taylor
-
Stock Market Today: Have We Seen the Bottom for Stocks?
Solid first-quarter earnings suggest fundamentals remain solid, and recent price action is encouraging too.
By David Dittman
-
Social Security Is Taxable, But There Are Workarounds
If you're strategic about your retirement account withdrawals, you can potentially minimize the taxes you'll pay on your Social Security benefits.
By Todd Talbot, CFP®, NSSA, CTS™
-
Serious Medical Diagnosis? Four Financial Steps to Take
A serious medical diagnosis calls for updates of your financial, health care and estate plans as well as open conversations with those who'll fulfill your wishes.
By Thomas C. West, CLU®, ChFC®, AIF®
-
What Wall Street's CEOs Are Saying About Trump's Tariffs
We're in the thick of earnings season and corporate America has plenty to say about the Trump administration's trade policy.
By Karee Venema
-
The Role of the Dollar in Retirement: Is It Secure?
Protect your retirement from de-dollarization, because “capital always goes where it is treated best."
By Adam Shell
-
Retire in France for Beauty and Culture
France offers a great history and a slower pace of life for retirees. At times, it can feel like stepping into a postcard.
By Brian O'Connell
-
To Stay on Track for Retirement, Consider Doing This
Writing down your retirement and income plan in an investment policy statement can help you resist letting a bear market upend your retirement.
By Matt Green, Investment Adviser Representative
-
How to Make Changing Interest Rates Work for Your Retirement
Higher (or lower) rates can be painful in some ways and helpful in others. The key is being prepared to take advantage of the situation.
By Phil Cooper