Let’s face it: buying a home is tougher than ever for first-time buyers. So if you’re in a position to help your child take that leap, it’s a generous move—and a smart one. But when real estate and family mix, things can get tricky fast if you’re not careful.

Here are three thoughtful (and IRS-friendly) ways to support your kid’s path to homeownership, plus a few common traps to avoid.

1. Give Cash—The Smart Way

The most straightforward way to help? Hand over cash. It’s simple, flexible, and lets your child use the money however they need—most likely for a down payment or closing costs.

Here’s the magic number: in 2025, you can give up to $19,000 per person (or $38,000 as a couple) without triggering any gift tax paperwork. Go over that, and it just eats into your lifetime exemption—which, unless you’re planning to give away more than $13.99 million, won’t cause any immediate problems.

If your kid’s getting a mortgage, you’ll need to write a short gift letter saying the money is a gift, not a loan. Easy and effective.

2. Be the Bank—On Your Terms

Want to keep some structure (and teach a little financial responsibility)? Consider a family loan. You lend the money, they repay you with interest, and everyone wins.

Here’s the pro move: you can forgive part of the loan each year within the annual gift limit, making it a clever combo of loan and gift.

But don’t treat it like a handshake deal—this needs to be official. That means a written loan agreement, a payment schedule, and a reasonable interest rate that aligns with IRS guidelines. Otherwise, the IRS might consider it a disguised gift, and no one wants that kind of attention.

A good estate attorney or CPA can draft the paperwork properly—and it’s worth every penny.

3. Consider a Trust (It’s Not Just for the Ultra-Rich)

Think trusts are only for the wealthy? Think again. If you’re planning to gift an entire property, or just want to protect the home from future issues like divorce, lawsuits, or inheritance drama, a trust is worth exploring.

There are two main types:

• Revocable trust: You stay in control and can make changes. Great for passing on property after your death without the hassle of probate.
• Irrevocable trust: Harder to change but stronger in terms of asset protection and tax benefits. You can even allow your child to live in or rent the property while you’re still around.

Trusts can also help when more than one heir is involved. Want your kids to co-own the family cabin or divide rental income fairly? A trust lays it all out clearly and legally—saving everyone from stress later.

Common Mistakes to Avoid

Even with good intentions, the wrong move can create expensive problems. Watch out for these:

Adding Your Kid to the Deed

It seems like a shortcut—but it’s really a tax trap. Doing this could lead to major capital gains taxes when they sell, and you lose control of the property in the meantime. Plus, their share becomes vulnerable if they get sued or divorced.

Leaving the Property Only in a Will

Wills sound fine, but they send your estate through probate—an expensive and public process. A trust, on the other hand, skips probate, offers more privacy, and gives you more control over how things are handled.

Selling the House for $1

It’s an old trick that backfires. The IRS sees it as a poorly structured gift, and your child gets your original cost basis (translation: higher taxes later). No real benefit, and plenty of potential confusion.

Final Thoughts

Helping your child buy a home isn’t about spoiling them—it’s about giving them a solid foundation in a tough market. But how you help makes a huge difference. Done right, your support can build generational wealth. Done wrong, it can create tax headaches and family tension.

Not sure where to start? I’m happy to connect you with estate planners, CPAs, or local lenders who know this space well.

Let’s make sure your gift becomes a legacy, not a liability.