Home Buying Season Is Here

With homeownership increasingly out of reach for younger generations, many families are stepping in to help. In 2024, the average financial gift nationally was $115,000—ranging from $128,000 in Ontario to $204,000 in British Columbia—a whopping 73 percent increase since 2019!¹

While this can be a meaningful gesture, it requires careful planning to avoid unintended tax, family law or financial consequences. Support can take many forms, including gifting cash, lending funds or purchasing a property in your name—each with differing implications. In brief, here are four high-level considerations:

1. How does this impact my own financial situation? Many families draw from lifetime savings to provide support, so it’s important to assess how this can affect retirement or long-term plans.

2. What if the recipient’s relationship ends? If the recipient is in a relationship, a breakup could lead to a division of property under family law. Certain legal structures—such as ownership arrangements or cohabitation agreements—may help mitigate risks.

3. Are there tax implications? While Canada has no gift tax, keep in mind that certain arrangements could trigger taxable events. Large gifts from taxable investment accounts could result in unexpected capital gains tax. There may also be future tax implications. For instance, if you structure the arrangement to co-own a home with the recipient and it isn’t your principal residence, capital gains may apply upon its sale/disposition, or there may be future cross-border tax implications if you retire abroad.

4. Will this affect my estate plan? If you have multiple beneficiaries, including the recipient, you may need to adjust an estate plan to ensure fairness. A strategic approach might include integrating gifting into an estate equalization plan—through lifetime gifts or testamentary planning using trusts or insurance.

The Many Benefits

When approached thoughtfully, supporting a home purchase can offer wide-ranging benefits. Many find value in witnessing their wealth in action—helping
loved ones when support is most needed, rather than waiting for an estate distribution. This support can help mitigate long-term financial stress for the recipient. Gifting during your lifetime may help simplify your estate by reducing its overall size, which can ease future administration and potentially reduce probate fees, depending on the province. It can also be a teaching opportunity: smaller, ongoing gifts may be appropriate ways to help recipients invest and plan for the future by leveraging tax-advantaged tools like the Tax-Free Savings Account (TFSA) or First Home Savings Account (FHSA).

As always, seek the advice of tax and family law professionals.

^{1. https://financialpost.com/news/homebuyers-rely-bigger-gifts-from-parents}

‍