Will the Blitts ever be able to help their daughter buy a home?

Financial Post Magazine
December 2008

Then: Back in the spring, Ottawa residents Kevin and Linda Blitt's biggest financial concern was the upcoming nuptials of their 27-year-old daughter, Jennifer, and her fiancé, Bill. It wasn't the fact that weddings are expensive that was troubling the Blitts. What they really wanted to do was help Jennifer and Bill by giving or lending them $20,000 for a down payment to buy their first home. Making matters more urgent was Rover, Jennifer and Bill's aging, incontinent beagle. It was just getting too difficult to keep the poor dog in their high-rise apartment, with his increasingly frequent needs to dash outside to relieve himself.

Given that Kevin and Linda - age 52 to and 48 – were only two years away from paying off the mortgage on their home, and that they had an income of more than $150,000, they figured they would be able to afford tohelp the kids. The question was, how? For starters, they were concerned about potential tax implications of transferring so much money. More generally, they were concerned about the strife that making large loans within families can cause, and whether Jennifer and Bill would be able to pay it back within eight years, when Kevin hits 60, his target for retirement.

Despite their concerns, the Blitts developed three options for helping Jennifer and Bill buy a home: (1) Lend them $20,000 and co-sign the mortgage; (2) buy a home and rent it to Jennifer and Bill with a view to selling it later and giving after-tax equity growth to the young couple as a gift; (3) be lavish and give Jennifer and Bill a $20,000 gift and a $20,000 loan, so that they'd have a smaller mortgage and an easier time paying back the loan. The Blitts' question: Which option was best?

Full text: Family file revisited


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