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Dear Parents & Grandparents Who Are Considering Helping A Loved One With A Gift To Purchase A Home



Dear Parents and Grandparents,


The media is again spewing a false narrative about how recently parents and grandparents are helping their kids buy a home......but this is nothing new. The concept of parents and grandparents helping their kids out financially has happened for centuries. The only difference, is that now there is much more money in the hands of older generations living longer.

The headlines speak mostly about spoiled rich kids being given tons of money to get ahead.....and yes, this happens for sure, and to many this seems unfair. But 'gifting' or 'loans' from parents and grandparents has always happened and it happens at all different price levels. Sometimes much less wealthy parents are much more generous. Relative to their wealth they are often MUCH more generous.


There are also many parents and grandparents who are adamant about by not giving their kids any assistance: because, surely they should experience the same sacrifices and work as hard as they did to EARN the right to home ownership? While this may have some truth, the reality is that wages have not kept up with the costs to buy a home...... years of under-building homes, has resulted in prices skyrocketing especially recently, with builders more focused on more expensive and more profitable options.


The current wealth imbalance between the older and younger generations, has made gifting one of the best solution for the next generation to play catchup.


The transfer of wealth - is estimated to be about $68 TRILLION over the next 2 decades - and will be the largest stimulus in the history of real estate.....and the economy!


For parents and grandparents who are consider helping a loved one with a gift for home purchasing, here are some things you may consider.....


1. If I have extra capital, why not help those I love most.


2. If I have the wealth that ultimately will land in the hands of my heirs, why not share that now rather than later....AND have some control of how that inheritance is invested/spent!


3. If these kids will look after me later in life, why not help them now? Maybe we will move in with them at some point?


4. If I wish to reduce my estate tax burden, diversifying my estate now may have tax savings benefits?


5. If I need to help my kids pay rent, why not put that money towards ownership instead?

6. If inflation is 2%, a $50,000 loan now to help buy a $500,000 home may elevate that asset by $100,000 in 10 years.


7. Maybe at some point my kids/grandkids will help ME out financially?


8. Helping my kids/grandkids now may influence how they look at me at the Thanksgiving table.....

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Content by Nina Brown Alameda Realtor

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