House for my daughter

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kenoryan
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House for my daughter

Post by kenoryan »

My wife and I have agreed to help our daughter buy a house. She lives in Portland. We live in the Midwest. Shes looking at small starter homes and they’re like 900k. I think she can afford the mortgage but she’s not saving fast enough for a down payment. We have agreed to give her 10%. She puts 10% and we get the house. I know I will need to report this as a gift that will count towards the total of whatever number it will be in the future.

Now, she just texted me saying she heard a podcast that said that the money gifted by the parents to the child to buy a house is deductible on the parents’ income taxes? I don’t know how that would be, but if true, I’m going to give her 20%!

Is it true that I can take that off my taxes?
123
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Re: House for my daughter

Post by 123 »

No, a gift of a down payment is not deductible.

If the gift is more than $15,000 you would need to file a gift tax return. If you have a spouse who also gives more than $15,000 they would need to file a gift tax return as well. Even though federal gift tax returns may be required no gift tax would be involved unless you have exceeded the federal gift and estate tax exemption for all the gifts (over the annual exempt amount) you have given. The federal lifetime gift tax exemption is $11.7 million per person for 2021.
Last edited by 123 on Wed Jul 21, 2021 11:50 pm, edited 1 time in total.
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Topic Author
kenoryan
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Re: House for my daughter

Post by kenoryan »

Thank you. It’s what I thought.
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Watty
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Re: House for my daughter

Post by Watty »

kenoryan wrote: Wed Jul 21, 2021 11:31 pm She lives in Portland. We live in the Midwest. Shes looking at small starter homes and they’re like 900k.
Is that Portland Oregon or Portland Maine?

I used to live in Portland Oregon so I very vaguely keep track of home prices there.

There may be very prime areas where you can pay that much for a "small starter house" but even though prices have gone up a LOT in Portland Oregon there are still lots of decent areas where you can find very acceptable housing for $500K to $600K or even less and get more than a "small starter house".

If she needs help to buy a house then I would suggest that she looks for something more in that price range even if she needs to compromise some on her commute.

Giving her money to buy a $900K starter home could be enabling her to get into trouble so it could be counter productive.

For example take a look at what she could get in Beaverton, Tigard, Tualatin, or Oregon City for less than $600K (I am not as familiar with the east side of town)
BreadandButter
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Re: House for my daughter

Post by BreadandButter »

I agree with everything Watty said. You should take a trip out there to see for yourself.
BlackDiamond
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Re: House for my daughter

Post by BlackDiamond »

Is your daughter able to qualify for the mortgage on her own (deed will be in her name) or are you and your wife going to be purchasing the house and she will make the payments?

If the latter, you certainly will be eligible for some nice tax deductions.

For that price range, I'm guessing she is looking around the neighborhoods of Tabor, Laurelhurst and the surrounding areas West of I-205. It is possible to find starter homes in those areas for $500k-$600k price points.
PDX_Traveler
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Re: House for my daughter

Post by PDX_Traveler »

Watty wrote: Thu Jul 22, 2021 12:58 am
kenoryan wrote: Wed Jul 21, 2021 11:31 pm She lives in Portland. We live in the Midwest. Shes looking at small starter homes and they’re like 900k.
[...]

I used to live in Portland Oregon so I very vaguely keep track of home prices there.

There may be very prime areas where you can pay that much for a "small starter house" but even though prices have gone up a LOT in Portland Oregon there are still lots of decent areas where you can find very acceptable housing for $500K to $600K or even less and get more than a "small starter house".

[...]

For example take a look at what she could get in Beaverton, Tigard, Tualatin, or Oregon City for less than $600K (I am not as familiar with the east side of town)
+1
I live in Portland (actually one of the western suburbs like the ones mentioned above). It's not $900k-starter-homes bad. Based on what I'd consider a starter home, at least - $400-$600k should find one fairly good housing.
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galawdawg
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Re: House for my daughter

Post by galawdawg »

kenoryan wrote: Wed Jul 21, 2021 11:31 pm My wife and I have agreed to help our daughter buy a house. She lives in Portland. We live in the Midwest. Shes looking at small starter homes and they’re like 900k. I think she can afford the mortgage but she’s not saving fast enough for a down payment. We have agreed to give her 10%. She puts 10% and we get the house. I know I will need to report this as a gift that will count towards the total of whatever number it will be in the future.

Now, she just texted me saying she heard a podcast that said that the money gifted by the parents to the child to buy a house is deductible on the parents’ income taxes? I don’t know how that would be, but if true, I’m going to give her 20%!

Is it true that I can take that off my taxes?
As others have noted, your gift of ~$90k to your daughter is not tax deductible and would require a gift tax return.

However, I am confused by the highlighted portion. Did you mean to say that you would gift her 10% of the house price and that she would use that and another 10% from her own funds to buy the house for herself (with a 20% down payment)? Or when you say "we get the house" do you mean that you and your spouse would have some sort of ownership interest?

While I don't wish to discourage you from gifting money to your daughter, I assume you are aware that your daughter would very likely be able to purchase a house with a down payment of 10% or less? A 20% down payment has the advantage of eliminating PMI but is generally not necessary with the wide variety of mortgage options now available.
Jack FFR1846
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Re: House for my daughter

Post by Jack FFR1846 »

It sounds like your daughter is a great candidate to rent for many years.
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Cyanide123
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Re: House for my daughter

Post by Cyanide123 »

Portland oregon or Maine?

My best friend just bought a 2300 sqft home for $450k. But that's portland Maine. It's in scarborough i believe which is a good neighborhood with excellent school districts. So I'm not so sure about the $900k price tag for a starter home.

In fact, i think you can get a new home built for $300/sqft in that area. 900k just sounds excessive.

Otherwise your question for taxes is already answered.
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Tamarind
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Re: House for my daughter

Post by Tamarind »

OP as someone who received a parental "gift" in return for co-ownership, I suggest not doing that. It worked out for me but it took time and paperwork to unwind the co-ownership after I got married, despite all parties acting in good faith and being on good terms with each other. No particular issues, but few potential spouses will be thrilled about living in a home owned by their spouse and in-laws (and not by them). Also, it was really my dad's wish that we buy since he smelled a good deal. I could have kept renting and would have had considerably less stress at some points had I done so.

If you want to help your daughter buy a house and you can afford to do so, keep it simple. Make her a gift and report it properly. Do not attach strings to your help.
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kenoryan
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Re: House for my daughter

Post by kenoryan »

Watty wrote: Thu Jul 22, 2021 12:58 am
kenoryan wrote: Wed Jul 21, 2021 11:31 pm She lives in Portland. We live in the Midwest. Shes looking at small starter homes and they’re like 900k.
Is that Portland Oregon or Portland Maine?

I used to live in Portland Oregon so I very vaguely keep track of home prices there.

There may be very prime areas where you can pay that much for a "small starter house" but even though prices have gone up a LOT in Portland Oregon there are still lots of decent areas where you can find very acceptable housing for $500K to $600K or even less and get more than a "small starter house".

If she needs help to buy a house then I would suggest that she looks for something more in that price range even if she needs to compromise some on her commute.

Giving her money to buy a $900K starter home could be enabling her to get into trouble so it could be counter productive.

For example take a look at what she could get in Beaverton, Tigard, Tualatin, or Oregon City for less than $600K (I am not as familiar with the east side of town)
She’s in Portland OR. She’s currently renting a tiny house in burnside for $2600. She lives with her boyfriend. Until there’s a ring, she wants to own the house by herself. Her office is in Beaverton and he works for Intel in Hillsboro so it would make sense to live on the west side. But she has her heart set on living on the east side. Particularly Ladd’s addition, Irvington, Alameda, Burnside, Buckman. My wife and I visited her in June and we checked out a couple houses. She’s a young doctor, just finished her residency and starting out on her own practice after completing her residency at OHSU last year. She can definitely afford the mortgage on her own since she has no student loans. Thanks everyone who sent helpful comments.

I will encourage her to look on the west side. I love Tigard because of the Costco. We will be gifting her the 10 or 20% and she will be the owner and will carry the mortgage and taxes. I’m aware that I have to report on my taxes, anything over $30k in gifts to her. She being our only child, we do do a little bit of helicoptering and spoiling. But hey whatcha gonna do eh?
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Wiggums
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Re: House for my daughter

Post by Wiggums »

kenoryan wrote: Thu Jul 22, 2021 7:55 am She’s in Portland OR. She’s currently renting a tiny house in burnside for $2600. She lives with her boyfriend. Until there’s a ring, she wants to own the house by herself. Her office is in Beaverton and he works for Intel in Hillsboro so it would make sense to live on the west side. But she has her heart set on living on the east side. Particularly Ladd’s addition, Irvington, Alameda, Burnside, Buckman. My wife and I visited her in June and we checked out a couple houses. She’s a young doctor, just finished her residency and starting out on her own practice after completing her residency at OHSU last year. She can definitely afford the mortgage on her own since she has no student loans. Thanks everyone who sent helpful comments.

I will encourage her to look on the west side. I love Tigard because of the Costco. We will be gifting her the 10 or 20% and she will be the owner and will carry the mortgage and taxes. I’m aware that I have to report on my taxes, anything over $30k in gifts to her. She being our only child, we do do a little bit of helicoptering and spoiling. But hey whatcha gonna do eh?
Thanks for the update. I’ve been told not to helicopter and spoil. I do a little of both. :-)
Last edited by Wiggums on Thu Jul 22, 2021 8:14 am, edited 1 time in total.
jbmitt
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Re: House for my daughter

Post by jbmitt »

Has she considered a doctors loan? My wife and I were in very similar situations when we moved for her first attending job. We weren’t married and were qualified jointly or on her own. I just recall being approved for asinine amounts based on her contract. The interest rates were surprisingly competitive and there were several down payment options from 0% to 20% without PMI.

We ended up buying too much house and promptly moved in 2.5 years. Something to consider too if she isn’t a partner yet.

On a more positive note, we eventually got married and purchased our next house together.
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Watty
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Re: House for my daughter

Post by Watty »

kenoryan wrote: Thu Jul 22, 2021 7:55 am She’s a young doctor, just finished her residency and starting out on her own practice after completing her residency at OHSU last year.
It would be good for her to take a look at the White Coat Investor web site which is run by an emergency room doctor who is a regular poster here.

https://www.whitecoatinvestor.com/buyin ... right-way/
kenoryan wrote: Thu Jul 22, 2021 7:55 am But she has her heart set on living on the east side. Particularly Ladd’s addition, Irvington, Alameda, Burnside, Buckman.
As I recall some of those old houses looked fantastic but they can also be money pits. Whatever she does she should not waive the house inspection on a hundred year old home. If she is going to buy an older home like that then she should start looking for a good house inspector now since inspecting an old home takes special knowledge.

It would be good for her to carefully research the schools there. My son and his wife bought a house that was in a desirable area because it was within walking distance of a town square where a lot of nightlife and events take place. When they had their first kid they quickly realized that the schools were pretty bad so they ended up selling that house and buying a different one in an area that had great schools. They actually did pretty well financially since they bought the first house near the end of the 2008 housing crash when prices were low. Your daughter may be doing the opposite and could be buying at the top of a housing boom which could be a problem if they want to move in a few years.

Another thing for her to consider is that at least where I live the traffic has been a lot lighter during the pandemic because of people working from at home and the economy being slow. They might be OK with the commute now but it could be a lot worse when things get better.
jbmitt wrote: Thu Jul 22, 2021 8:12 am Has she considered a doctors loan?
+1

It sounds like with a doctors loan she does not really need your money to be able to buy a house and one downside of you offering to give her money for the down payment is that it may be putting subtle pressure on her to buy a house now.
boglerman
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Re: House for my daughter

Post by boglerman »

While you could do this, maybe a little delayed gratification and saving on her part is in order? I presume (and by your own admittance) you've taken quite good care of her. From my perspective your contribution amount for the down payment is negligible. As a doctor with no student loans I would think she would be able to save the 90k fairly quickly, and if she can't, then there are bigger problems here...Then again this could be my own jealousy speaking from having it the hard way...
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kenoryan
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Re: House for my daughter

Post by kenoryan »

Watty wrote: Thu Jul 22, 2021 9:34 am
kenoryan wrote: Thu Jul 22, 2021 7:55 am She’s a young doctor, just finished her residency and starting out on her own practice after completing her residency at OHSU last year.
It would be good for her to take a look at the White Coat Investor web site which is run by an emergency room doctor who is a regular poster here.

https://www.whitecoatinvestor.com/buyin ... right-way/
kenoryan wrote: Thu Jul 22, 2021 7:55 am But she has her heart set on living on the east side. Particularly Ladd’s addition, Irvington, Alameda, Burnside, Buckman.
As I recall some of those old houses looked fantastic but they can also be money pits. Whatever she does she should not waive the house inspection on a hundred year old home. If she is going to buy an older home like that then she should start looking for a good house inspector now since inspecting an old home takes special knowledge.

It would be good for her to carefully research the schools there. My son and his wife bought a house that was in a desirable area because it was within walking distance of a town square where a lot of nightlife and events take place. When they had their first kid they quickly realized that the schools were pretty bad so they ended up selling that house and buying a different one in an area that had great schools. They actually did pretty well financially since they bought the first house near the end of the 2008 housing crash when prices were low. Your daughter may be doing the opposite and could be buying at the top of a housing boom which could be a problem if they want to move in a few years.

Another thing for her to consider is that at least where I live the traffic has been a lot lighter during the pandemic because of people working from at home and the economy being slow. They might be OK with the commute now but it could be a lot worse when things get better.
jbmitt wrote: Thu Jul 22, 2021 8:12 am Has she considered a doctors loan?
+1

It sounds like with a doctors loan she does not really need your money to be able to buy a house and one downside of you offering to give her money for the down payment is that it may be putting subtle pressure on her to buy a house now.
Thank you! yes, the old house is a huge concern for me. The guys who are flipping them are covering everything up so the real problems dont become evident for a while. And then...boom a huge bill.
Katietsu
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Re: House for my daughter

Post by Katietsu »

I second the advise to send her to the white coat investor. He has expanded offerings so there are podcasts, blogs, Facebook groups, etc. I would strongly recommend spending the $15 or so for his book.

My personal opinion is that very few physicians should purchase a home immediately after residency. She could spend a million on a house that does not meet her needs in 12 months. After seeing your friends who start on their career 8 years before you, the impatience to get into home ownership is understandable. But maybe a little time reading/listening to those who have gone before her will give her better perspective.
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kenoryan
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Re: House for my daughter

Post by kenoryan »

Katietsu wrote: Thu Jul 22, 2021 10:42 am I second the advise to send her to the white coat investor. He has expanded offerings so there are podcasts, blogs, Facebook groups, etc. I would strongly recommend spending the $15 or so for his book.

My personal opinion is that very few physicians should purchase a home immediately after residency. She could spend a million on a house that does not meet her needs in 12 months. After seeing your friends who start on their career 8 years before you, the impatience to get into home ownership is understandable. But maybe a little time reading/listening to those who have gone before her will give her better perspective.
I have bought her the whitecoat investor book and also recommended the website. And the millionaire next door so she can learn to live frugal. I agree that there is no rush but I feel her impatience is driven by the hot market and people from California buying up real estate in Portland . I guess she feels she needs to act now because next year she will pay more for the same house.
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Re: House for my daughter

Post by bloom2708 »

Jack FFR1846 wrote: Thu Jul 22, 2021 6:40 am It sounds like your daughter is a great candidate to rent for many years.
+1

Nothing like starting out with a giant anchor around your ankles.
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Re: House for my daughter

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This topic is now in the Personal Finance forum.
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retired@50
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Re: House for my daughter

Post by retired@50 »

kenoryan wrote: Thu Jul 22, 2021 11:02 am
Katietsu wrote: Thu Jul 22, 2021 10:42 am I second the advise to send her to the white coat investor. He has expanded offerings so there are podcasts, blogs, Facebook groups, etc. I would strongly recommend spending the $15 or so for his book.

My personal opinion is that very few physicians should purchase a home immediately after residency. She could spend a million on a house that does not meet her needs in 12 months. After seeing your friends who start on their career 8 years before you, the impatience to get into home ownership is understandable. But maybe a little time reading/listening to those who have gone before her will give her better perspective.
I have bought her the whitecoat investor book and also recommended the website. And the millionaire next door so she can learn to live frugal. I agree that there is no rush but I feel her impatience is driven by the hot market and people from California buying up real estate in Portland . I guess she feels she needs to act now because next year she will pay more for the same house.
The more we learn about this situation, the worse it sounds. This might sound harsh, but I don't think you're seeing this objectively.

She's a doctor with no student debt, presumably because you paid for college. If that's true, then you've already given her a huge head start in life. If she can't save a down payment while splitting rent of $2,600 with her boyfriend, then what makes you think she'll be able to handle a mortgage payment of over $3k per month. I think renting a while longer and/or waiting until they are married (if that's going to happen) would be wise. A dual income, no kids (DINK) couple should easily be able to swing buying a house all by themselves.

Hoping she'll read the millionaire next door to learn to live frugally is potentially wishful thinking. She just might need to learn to delay some gratification the hard way, by hearing the word "No" from you. Best of luck.

Regards,
This is one person's opinion. Nothing more.
123
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Re: House for my daughter

Post by 123 »

People always spend more when it's using other people's money, whether it's a credit card, mortgage/bank, or parent/relative.
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BreadandButter
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Re: House for my daughter

Post by BreadandButter »

The OP characterizing a $900k house (which likely has 2500 SF based on Zillow listings for the area) as a Starter Home is going to to get a reaction from many people. Maybe choose your words differently if you don't want a lot of people commenting on things other than your question.
Last edited by BreadandButter on Sat Jul 24, 2021 5:36 pm, edited 2 times in total.
TheBeanCounter
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Re: House for my daughter

Post by TheBeanCounter »

Yeah... $900k is not a starter home in Portland, OR. Sounds like you are subsidizing your daughter's doctor lifestyle prior to her earning it. I am all for supportive parents. However, seems like you and her could read The Millionaire Next Door again and focus on the chapter about Economic Outpatient Care.
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Re: House for my daughter

Post by JackoC »

boglerman wrote: Thu Jul 22, 2021 10:10 am While you could do this, maybe a little delayed gratification and saving on her part is in order? I presume (and by your own admittance) you've taken quite good care of her. From my perspective your contribution amount for the down payment is negligible. As a doctor with no student loans I would think she would be able to save the 90k fairly quickly, and if she can't, then there are bigger problems here...Then again this could be my own jealousy speaking from having it the hard way...
Last sentence is a breath of fresh air amidst the usual moralizing here on questions like this. Although, the fact you're self aware enough to mention that possibility makes it less likely it's actually driving your thoughts: the people who can't conceive of their reaction being shaped by envy are probably the ones more likely to slip into it.

And I don't exactly disagree with any of the rest. Although 'maybe a little delayed gratification?', that is a 'maybe' IMO. There's a missing piece of info about whether the young doctor has good financial habits, as usual many responses jump to negative conclusions about that without much info.

Also the key factor I didn't see mentioned (might have missed but in few responses if any) is how big a deal it is from *OP's* financial position to pay out $90k. Responses would naturally focus on that issue if the question was a $90k car. I think it tends to get less emphasis when there's the shiny object of 'bad parenting' and 'moral failing' in case of generous parents and adult kids who accept it. It would make a big difference IMO if OP can sort of swing giving away $90k (I assume it wouldn't be suggested if outright unaffordable) vs. if $90k is pretty negligible in OP's overall financial picture, just another $90k (plus real return-taxes) that would go to the kid anyway when OP dies if not given now.

On Portland, in the northeast people will sometimes say it with no state and expect to be understood as referring to the one in Maine, even people not from Maine. Presumably vice versa on the west coast and obviously Oregon itself. Over the years generally I mean, not considering when one is in the news more than usually for controversial things, which we needn't dwell on further. Anyway now it's clear which one.
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kenoryan
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Re: House for my daughter

Post by kenoryan »

JackoC wrote: Fri Jul 23, 2021 10:15 am
boglerman wrote: Thu Jul 22, 2021 10:10 am While you could do this, maybe a little delayed gratification and saving on her part is in order? I presume (and by your own admittance) you've taken quite good care of her. From my perspective your contribution amount for the down payment is negligible. As a doctor with no student loans I would think she would be able to save the 90k fairly quickly, and if she can't, then there are bigger problems here...Then again this could be my own jealousy speaking from having it the hard way...
Last sentence is a breath of fresh air amidst the usual moralizing here on questions like this. Although, the fact you're self aware enough to mention that possibility makes it less likely it's actually driving your thoughts: the people who can't conceive of their reaction being shaped by envy are probably the ones more likely to slip into it.

And I don't exactly disagree with any of the rest. Although 'maybe a little delayed gratification?', that is a 'maybe' IMO. There's a missing piece of info about whether the young doctor has good financial habits, as usual many responses jump to negative conclusions about that without much info.

Also the key factor I didn't see mentioned (might have missed but in few responses if any) is how big a deal it is from *OP's* financial position to pay out $90k. Responses would naturally focus on that issue if the question was a $90k car. I think it tends to get less emphasis when there's the shiny object of 'bad parenting' and 'moral failing' in case of generous parents and adult kids who accept it. It would make a big difference IMO if OP can sort of swing giving away $90k (I assume it wouldn't be suggested if outright unaffordable) vs. if $90k is pretty negligible in OP's overall financial picture, just another $90k (plus real return-taxes) that would go to the kid anyway when OP dies if not given now.

On Portland, in the northeast people will sometimes say it with no state and expect to be understood as referring to the one in Maine, even people not from Maine. Presumably vice versa on the west coast and obviously Oregon itself. Over the years generally I mean, not considering when one is in the news more than usually for controversial things, which we needn't dwell on further. Anyway now it's clear which one.
My wife and I come from very humble backgrounds. We left our country 30 years ago with $200 between us. We have worked hard and saved a lot. With a net worth having exceeded the total lifetime giftable amount for a couple, we are always looking for ways to pass money on to our only child. While we are still alive, that is. We live in a 400k house which is way bigger than the tiny houses we grew up in and we both drive Toyota’s. We want to give her what we never had growing up, not having to worry about money.

So we do the annual 30k gift into a brokerage account. We paid for her school and car. She’s a good kid and is frugal. She’s honest, truthful and kind. Very careful with her money. Right now she’s a junior employee and will make partner in one more year. Being in primary care, she’s probably not going to be making a ton of ‘doctor’ money. Right now she takes home $6300 a month. She’s saving $3500 towards her down payment. We are just trying to help her buy a decent house. It may not be a starter home but it would be her first house at age 33.

Between the two of us, my wife and I make approximately $80k a month. It’s not very difficult for us to save for a few months and come up with a down payment for her house. I just wondered if it was true what her lender told her that a gift for down payment for a house might be tax deductible for me. I didn’t think it would be but I just wanted to check with the gurus on this board from whom I have learned a lot. But anyway, now you know my story! Thanks for all the thoughtful replies!
is50xenough
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Re: House for my daughter

Post by is50xenough »

I applaud your efforts to help your daughter and have no issues with use of “starter home” etc. good luck finding a solution.

She might get back to person who originally gave advice for clarification. There is the full price sale to your child option in this article but not sure there is any option that is as beneficial as you were hoping:

https://www.marketwatch.com/amp/story/h ... 2015-02-23

Your daughter sounds like a great kid and you sound like wonderful parents. Congrats on a successful life.
Always passive
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Re: House for my daughter

Post by Always passive »

Watty wrote: Thu Jul 22, 2021 12:58 am
kenoryan wrote: Wed Jul 21, 2021 11:31 pm She lives in Portland. We live in the Midwest. Shes looking at small starter homes and they’re like 900k.
Is that Portland Oregon or Portland Maine?

I used to live in Portland Oregon so I very vaguely keep track of home prices there.

There may be very prime areas where you can pay that much for a "small starter house" but even though prices have gone up a LOT in Portland Oregon there are still lots of decent areas where you can find very acceptable housing for $500K to $600K or even less and get more than a "small starter house".

If she needs help to buy a house then I would suggest that she looks for something more in that price range even if she needs to compromise some on her commute.

Giving her money to buy a $900K starter home could be enabling her to get into trouble so it could be counter productive.

For example take a look at what she could get in Beaverton, Tigard, Tualatin, or Oregon City for less than $600K (I am not as familiar with the east side of town)
I respectfully disagree. Let her buy the most expensive house that she can afford. In the long term she will thank you for the recommendation. I used to live in LA, and out of luck and a little help from my parents I was able to buy a house in Beverly Hills. What a difference when I moved overseas and sold it. I thank my parents everyday for their help and encouragement. Think big!
Always passive
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Re: House for my daughter

Post by Always passive »

Sorry
Strayshot
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Location: New Mexico

Re: House for my daughter

Post by Strayshot »

OP, you are wealthy given a nearly $1M/year income and assets as described. You should give your daughter as much money as you feel like so she can buy a house. Or just buy her the house. No there will be no tax deduction. Your daughter sounds like a responsible young adult and waiting until there is a legal contract with her boyfriend before commingling assets is smart as well.

My spouse and I paid for all of our own schooling after scholarships, including the $300+K of medical education debt (long since paid off). The help I got from my parents (not wealthy, her parents were in poverty so no help there) so that I could get to 20% down payment on my first (and only so far!) home was invaluable. In hindsight, if they had more money to give me and I was able to buy a larger-than-starter-home, that 15k more would have translated into net worth gains on the order of $250k now (notionally a 15% return annual on the funds).

My kids are younger, but my goal is to behave much like you have. As long as they are responsible people and maintain a good work ethic (harder and harder to find these days) I will do everything in my power to support them with the money we can’t take with us and that they will eventually get anyways. Why not frontload their quality of life when they can use it most? Inheriting money in your 50’s and 60’s is much less useful.

Only risk here is that often newly minted physicians will learn what they do and don’t want in the first few years of practice (both geography and practice style/environment). If the house is bought and sold because they change geography in the first few years, the sizzling market may or may not last and money would be lost on the transaction costs. Once again it’s small peanuts compared to your wealth so might not matter.
JackoC
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Re: House for my daughter

Post by JackoC »

kenoryan wrote: Fri Jul 23, 2021 5:49 pm
JackoC wrote: Fri Jul 23, 2021 10:15 am
Also the key factor I didn't see mentioned (might have missed but in few responses if any) is how big a deal it is from *OP's* financial position to pay out $90k. Responses would naturally focus on that issue if the question was a $90k car. I think it tends to get less emphasis when there's the shiny object of 'bad parenting' and 'moral failing' in case of generous parents and adult kids who accept it. It would make a big difference IMO if OP can sort of swing giving away $90k (I assume it wouldn't be suggested if outright unaffordable) vs. if $90k is pretty negligible in OP's overall financial picture, just another $90k (plus real return-taxes) that would go to the kid anyway when OP dies if not given now.
My wife and I come from very humble backgrounds. We left our country 30 years ago with $200 between us. We have worked hard and saved a lot. With a net worth having exceeded the total lifetime giftable amount for a couple, we are always looking for ways to pass money on to our only child. While we are still alive, that is. We live in a 400k house which is way bigger than the tiny houses we grew up in and we both drive Toyota’s. We want to give her what we never had growing up, not having to worry about money.

So we do the annual 30k gift into a brokerage account. We paid for her school and car. She’s a good kid and is frugal. She’s honest, truthful and kind. Very careful with her money. Right now she’s a junior employee and will make partner in one more year. Being in primary care, she’s probably not going to be making a ton of ‘doctor’ money. Right now she takes home $6300 a month. She’s saving $3500 towards her down payment. We are just trying to help her buy a decent house. It may not be a starter home but it would be her first house at age 33.

Between the two of us, my wife and I make approximately $80k a month. It’s not very difficult for us to save for a few months and come up with a down payment for her house. I just wondered if it was true what her lender told her that a gift for down payment for a house might be tax deductible for me. I didn’t think it would be but I just wanted to check with the gurus on this board from whom I have learned a lot. But anyway, now you know my story! Thanks for all the thoughtful replies!
In which case I think basically all the responses which have harped on supposed moral failing of you or your daughter in making and receiving such a gift are rubbish, to be frank. And while yes you did just ask the technical question whether the gift could be tax deductible (no, as was correctly answered already), and did not ask 'do you think this is a good idea besides that?', the responses to such questions always, always get into the latter area, often heavy with (IMO often envy-driven) stereotypes about children of successful people.

At your level of money and with children as the main intended beneficiaries eventually (some people with children would rather mainly cut them out in favor of charity, that's fine for them but it's not for everybody, not for me) I agree with finding ways, that are not too intrusive onto their sense of their own achievement, to give some sooner rather than later. Again you didn't actually ask, but I think your general idea here is sound in your case, plenty of money and daughter has already proven herself an achiever in her own right: becoming an MD is no minor thing.
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