The Myplace Playbook // 075

Hey Everyone,

You're watching Netflix. Sort of. You picked the show, it's not that good, and you're half scrolling your phone.

Somewhere in the scroll you find out your friend's brother's kid just bought a house.

Good for them. But how?

Your own kid doesn't have a shot at that. Not at their age. Not at these prices.

"Are you still watching?"

You've missed a solid chunk of the show and you're a little more annoyed than you'd like to admit.

Unlike Netflix, I'm not here to judge.

I get it. And I can tell you how that other family probably pulled it off, because it's usually not a mystery and it's almost never luck.

Most of them started by asking the right question.

Ask what's stopping them before you decide what to give them.

Almost every parent I talk to jumps straight to the amount. How much do we have, how much can we part with, what's fair if there's more than one kid.

Wrong first question.

The right one is: what is actually stopping your kid from buying? There are only two real answers, and they need completely different help.

They don't have enough saved. Their income is fine. Their credit is fine. They just can't get a down payment together while paying rent. This is a money problem, and money fixes it.

They can't qualify. Income is too thin, or it's self-employed and messy, or the credit needs work. You could hand them $100,000 and they still wouldn't get approved. This is a qualification problem, and a cheque doesn't touch it.

Families give money to solve problems money can't solve all the time. Find out which one you're dealing with first. It takes one phone call to figure out.

If it's savings: the gift.

You're in good company. In CMHC's most recent survey, 41% of first-time buyers used a gift or an inheritance toward their down payment. Ten years ago that was about one in five. This stopped being unusual a while ago.

What lenders need:

A signed gift letter. It confirms who's giving, how much, that it never has to be repaid, and that you're not getting a piece of the property in return. Your broker provides the form.

The money in your kid's account early. Most lenders want it sitting there 15 to 30 days before closing. Money that shows up the week of closing sets off alarms and creates a paperwork scramble nobody needs. If the funds are coming from outside Canada, that stretches to 90 days.

It has to be a real gift. If there's an understanding that they'll pay you back, that's a loan, and it has to be declared as one. Signing a gift letter for something both sides know is a loan is mortgage fraud. That sounds dramatic for a family arrangement, and it's still true.

Two things that surprise people: there's no gift tax in Canada, and there's no limit on what you can give. The constraints are all about documentation, not amount.

If it's qualification: co-signing, and know what you're signing.

This is where families get hurt, because the two options sound similar and aren't.

A co-signer goes on title. They're a borrower and an owner, with everything that comes with it.

A guarantor isn't on title and doesn't own anything, but is still on the hook if payments stop.

Either way, that mortgage now appears on your credit. It counts against you if you want to borrow for anything else. And if your kid misses payments, that lands on your credit report, not just theirs.

The part almost nobody asks about is the exit. Getting off later isn't automatic. Your kid generally has to requalify on their own to remove you, and if you're on title, there's a legal transfer with its own costs. Plan for how you get out before you get in.

None of this is a reason to say no. Plenty of families do it and it works out fine. Go in with your eyes open.

Check what they already have first.

Before you move any of your own money, find out what your kids can access on their own. Two programs, both underused:

The FHSA. $8,000 a year, up to $40,000 lifetime, per person. Tax deductible going in, tax free coming out, and no repayment. If your kid doesn't have one open, that's the single best fifteen minutes they could spend this month.

The Home Buyers' Plan. Up to $60,000 out of an RRSP, tax free, per person. Half the articles online still say $35,000. That number changed in 2024. If your kid read one of those and wrote off the option, tell them to look again.

Two of them buying together can stack both. That's real money, and it's theirs, and it might mean you give less than you were bracing for.

One BC number worth knowing.

The first-time buyer property transfer tax exemption covers the PTT on the first $500,000 of value, for homes with a fair market value up to $835,000. Under $500,000, they pay no property transfer tax at all. Between $500,000 and $835,000, it's $8,000 off. Above $835,000 it phases out and disappears at $860,000.

Worth checking against what they're actually looking at around here, because a fair number of local listings land inside that range. That's thousands of dollars that stays in the family, and it's the kind of thing people find out about after closing.

The part I'd want someone to tell me.

Money you give doesn't come back. If helping your kids buy means you're tighter in retirement than you should be, that's not generosity, that's a problem you've moved into the future.

There's usually a version that works for both generations. Find it before you sign anything, not after.

What to do with this.

The families that handle this well get everyone in one conversation instead of three separate ones. Parents guessing what the kids need, kids not wanting to ask, everybody being polite and nobody having numbers.

Hit reply and I'll set up a call with all of you on it. We'll find out what's actually stopping them, what they can already access on their own, and what it would really take. No pressure and no cost, and you'll all know where you stand.

Then you can go back to your show.-Andrew