Opinion: How B.C. parents can help their kids buy their first home
Written for Daily Hive Urbanized by James Spagnuolo of BC Real Estate Lawyers.
If you’ve been thinking about helping your kids buy their first home, you’re already doing one of the most meaningful financial moves a parent can make.
Here’s the part worth knowing: you don’t have to fund the whole thing. Even a portion of the down payment, given smartly, can be the difference between waiting and moving in. Canada has no gift tax; what you give your kids today lands in their hands in full. And when that money goes into the right account, it can earn them a tax deduction, grow tax-free, and return tax-free when they buy.
This is part of a three-part series for first-time buyers and the families helping them get there. If you’ve been waiting for the right moment, this series might help you decide.
Rigucci/Shutterstock
The smartest place to land the gift
Helping your kids buy is generous in any decade. But there are a few reasons why giving today has a few advantages. The biggest one is the simplest: today in Canada, there’s no gift tax on a cash gift.
Whatever you give your adult children lands in their bank accounts in full. It’s one of the most meaningful financial moves you can make as a parent.
Helping while you can also means you get to see the result. You’ll be able to celebrate them receiving the keys to their first home, the conversations that come with stability and assurance instead of uncertainty, and the memories together in their new home.
A few other tools worth knowing
The FHSA is the most useful starting point, but it isn’t the only one.
The Home Buyers’ Plan (HBP)
If your child has been contributing to an RRSP, they can withdraw up to $60,000 from it toward their first home and pay it back over 15 years. For couples buying together, that’s up to $120,000. The FHSA and HBP can be used in the same purchase, which is where the down payment starts to look genuinely different from what was expected.
A formalized gift letter
When you contribute toward a down payment, your mortgage lender will ask for a formal, signed letter from you confirming the money is a gift, not a loan.
Cash, not stock
Gifting appreciated investments or property is treated differently and can come with its own considerations. A quick call with your accountant is the right move before gifting anything other than cash.
What it can look like for a brand-new home
Imagine this scenario: your child has been diligently saving for years, accumulating a portion of a down payment for a home. You decide to help by gifting them an amount, no matter how small, which they can then add to their savings to put towards the purchase.
Let’s see how this down payment applies to a two-bedroom home for a first-time buyer.
For example, two-bedroom homes start at $839,900 at the brand-new Trailside community in North Vancouver’s Lynn Valley community.
Mosaic Homes
Here’s how the math breaks down for a qualifying buyer:
- The GST rebate offsets the federal GST on a new home under $1 million. On this home, that’s $41,995.
- The BC Property Transfer Tax exemption for newly built homes covers the full PTT on purchases up to $1.1 million. For this home, that’s another $14,798.
- The 30-year amortization on a new build lowers the monthly payment by $339 a month, compared to a 25-year, resulting in over $4,000 a year of breathing room.
Together, that’s $56,793 in direct savings at purchase, before counting your gift or anything else they’ve put away for a down payment.
That’s not a small assist. That’s a real home, in a real neighbourhood, with possession next year instead of “someday.”
Walk through it together
The best way to know if this is the right move for your family is to see what’s actually available. Go to an open house, visit a home store, or book a time to walk through a property with a Realtor. Use this opportunity to talk openly about the numbers.
New projects like Trailside in the Lynn Valley are examples of what’s on the market for first-time buyers right now, and the experts at new home communities can show you how to navigate family contributions and government programs.
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