If you’re wondering, “Can I help my daughter buy a house?” or “Can I help my son buy a house without creating a tax headache?”—you’re asking the right questions. As a high-net-worth parent, helping your child enter the housing market can be one of the most meaningful financial moves you make. But without careful planning, what starts as a gift of generosity can lead to unintended tax consequences.
This blog will provide tax-efficient strategies to support your child’s homeownership goals, including structured gifting and leveraging favorable tax rules.
Tax Implications of Helping Your Child Buy a House
As a parent, helping your child buy a home can be a generous offer. However, mishandling large financial gifts or property transfers can create tax complications or make you less prepared for retirement. The IRS imposes a gift tax on amounts exceeding the annual exclusion. If the value increases, transferring property ownership may trigger capital gains tax.
The IRS permits an annual gift tax exclusion of $19,000 per recipient in 2025. If your gift exceeds this amount (e.g., covering a sizable down payment or giving your child a home outright), you must report the excess on a gift tax return (Form 709).
While you won’t owe taxes immediately, it reduces your lifetime estate and gift tax exemption. Currently, the tax exemption is $13.99 million per individual and may drop significantly in 2026 when current tax laws sunset. Hence, proactive tax planning is essential so your generosity doesn’t result in unexpected tax consequences for you or your child.
5 Tax-Friendly Strategies to Help Your Child Buy a Home
You can help your child buy a house without incurring extra taxes. Here are some smart ways to make that happen.
1. Use the annual gift tax exclusion
Instead of providing a lump sum to reduce potential tax implications, consider making annual gifts over a few years to maximize the benefits.
For example, in 2025, you and your spouse can each gift your child $19,000, allowing for a combined $38,000 this year—and another $38,000 in 2026, assuming the exclusion remains the same. This strategy will enable you to make a sizable down payment without reducing your lifetime tax-free gift limit.
2. Make a loan instead of a gift
If you’d rather not give a gift directly, you can lend money to your child with a low-interest family loan. The IRS allows intrafamily loans, but you must follow applicable federal rates (AFRs) to prevent the funds from being treated as a disguised gift.
For instance, you can lend your child $300,000 at an interest rate equal to or above the IRS-set minimum so the loan remains compliant. If your child repays the loan, they maintain equity in the home while you avoid triggering the gift tax. The interest payments can also count as income, potentially enhancing your overall financial position.
3. Set up a family trust
A family trust is a great way to help your child buy a home while keeping control over the property. You can establish a revocable trust, which lets you modify the terms, or an irrevocable one, which removes the property from your taxable estate.
Either option offers flexible long-term planning, including asset protection and estate tax reduction. If set up correctly, your family trust can protect the home from creditors or future legal issues.
4. Co-buy property strategically
Co-buying property with your child is a good option, but you need to plan it carefully to avoid unexpected tax liabilities. Depending on how the property is titled, you may experience different implications:
- Tenancy in common: You and your child own specified percentages of the property, which can be transferred or sold separately. This option allows for more flexible inheritance planning but may trigger capital gains tax if ownership is transferred.
- Joint tenancy with right of survivorship: When one owner passes away, the property goes to the surviving owner. It helps prevent probate but may increase the estate’s value.
If you co-own a property with your child and later transfer your share, you might face capital gains tax if the property has gained value. Properly structuring ownership can minimize such risks.
5. Pay for expenses instead of the down payment
You can cover ongoing costs rather than contributing directly to the down payment for your child’s house. These expenses can include property taxes, mortgage payments, or home improvements.
However, it’s important to note that the IRS generally considers these payments gifts if you’re not legally obligated to make them. While you can still support your child this way, any payments on their behalf may count toward your annual gift tax exclusion.
This method allows you to ease your child‘s financial burden while keeping the property in their name—but it’s best to coordinate with a tax professional to stay within gifting limits and avoid unintended tax consequences.
Secure Your Child’s Future with Smart Tax Planning
Helping your child buy a house is a wonderful gift, but exploring tax-saving opportunities to protect your wealth and theirs is essential. Structured gifting, low-interest family loans, trusts, and availing of financial planning services can optimize your support while minimizing tax liabilities. Proactive planning ensures that your generosity won’t lead to unintended tax consequences.
Keep Your Kids Resilient!
Let me offer a suggestion. With 15 years in this business I have seen the outcomes of a lot of decisions around money and children. (Yes, even adult children). In my experience, the majority of our clients that have great wealth had to forge the path themselves. Here is where great parents excel….they don’t make things simple for their kids – they don’t take on the “hard” for their kids; rather, they love and coach their kids, but let them carry some of the “hard.” Simple/easy does not breed resilient kids. Challenges, hardships, struggles, stress, that builds resilient kids.
It’s just fine to help your kids! It’s just fine to fund various things for your kids, just be careful you don’t help so much that you start creating easy and comfortable, instead of resilient and wise. Despite your best intentions, it happens far too often where parents try to handle too much of the “hard” for their kids and rob them of the capacity to be resilient. If you want to leave your children the most valuable gift, help them be resilient and strong. Often, that tuition will come with hardship and struggles. You can love and support them without financially bailing them out! Choose carefully. Be wise. Don’t rescue them from all of their hardships.
Consult with a financial planner to tailor a tax-efficient strategy for your family. At Tencap Wealth Coaching, we specialize in making financial plans that align with your goals.
Learn why our advisory services are worth the fee and how we can secure your family’s financial future.
Disclaimer: The information contained herein should in no way be construed or interpreted as a solicitation to sell or offer to sell advisory services to any residents of any State other than the State of Utah or where otherwise legally permitted. All content is for information purposes only. It is not intended to provide any tax or legal advice or provide the basis for any financial decisions. Nor is it intended to be a projection of current or future performance or indication of future results. Moreover, this material has been derived from sources believed to be reliable but is not guaranteed as to accuracy and completeness and does not purport to be a complete analysis of the materials discussed. Purchases are subject to suitability. This requires a review of an investor’s objective, risk tolerance, and time horizons. Investing always involves risk and possible loss of capital.
Joe Griffin
Joe has been building and managing financial planning firms for the past 14 years. He loves the financial planning space and is very proud of the success and growth that has come from his proprietary marketing and leadership. Joe spent years being involved with the bright minds of the investment committee at Utah’s 529 college savings plan – a plan managing over 20 billion. Joe only works with firms that are stated fiduciaries on a client relationship. Joe is committed to leading a financial planning firm with ethics and integrity. The money management philosophy that Tencap subscribes to is built on strong academics and is supported by a highly impressive academic board. We can't wait to coach you on the excellence that Tencap stands for.
