Buying a Home for Your Child - A Quick Guide
But before you reach there in your life, consider how best to do so. Let's evaluate few options that can be of much help for your children
Common scenarios to help out include:
- Providing the down payment of home for the child's home
- Buying a house and renting it out to give rental amount to your child
- Buying a house for your child
- Co-owning the house with your child
It all depends upon Affordability
If you can afford then why let the children fritter away their hard-earned money on rent, which forces them to continue asking you for financial help. Therefore, it makes sense that you buy a home or an apartment in Pakistan for your children. Not only would it give them someplace affordable and decent in which to live, but many financial advisers suggest that buying your children a home can be an effective way of teaching them a lesson in financial responsibility. It can be advantageous for you as well.
Real estate agents say that they have seen a notable increase in the number of transactions in real estate sector made by parents for kids in recent years.
Gifting the Deposit
Most of the times, the parents opt to gift the amount in form of money to their child for tax reasons than paying the cost directly. All the parents who want to provide with the deposit for their child’s home must be aware that a gift is not repayable. Definitely, parents hardly take gifted money from their kids but it is legal requirement for parents to declare that there is no need for these funds to be repaid. According to a real estate agent, "if the parents are giving the money as a gift, the money needs to be sourced and tracked to avoid any issue."
Buying the Property Outright
Another strategy that most of the wealthy parents adopt is to just purchase a home outright and give it to their child. When your child is adult but is not in a position to buy home himself or cannot even afford mortgage or cannot take on the financial responsibility of home ownership - buying a home on full payment is the right option. However, this option comes with a number of tax implications - so make sure you take the legal advice in order to avoid any unexpected problem.