Canadian parents helping Canadian daughter and her US husband purchase a home in the US - Bill Spohn Lawyer


My husband and I would like to assist my daughter and her husband in purchasing their first home in Illinois.  Due to their level of income at this time {new baby, just married, husband just starting in his career, both have college degrees, great future... etc}its not enough to qualify for the modest house they would like to buy.
How can my husband and I help them out? Is there a limit on how much cash we can send them? Can we co-sign on a US mortagage? Can we buy the house and have them live in it, having them pay us rent to cover the mortgage costs.. would we have to live in the house in the US for any part of the year? What suggestions might there be? By the way, my daughter is in the US legally after having gone through  the hassles of alien fiance visa - and her/their son, born in Canada, has dual citizenship.

david ingram replies:

You are not subject to gift tax.  You can give any amount you want to yor son and law and daughter and grandchild. 

Whatever you do, don't buy the house and rent it to them unless you really like filling out paperwork and are willing to pay capital gains tax on any increase in value.

You could, I suppose, buy it in your name with a provisio in writing that it is their house and you are holding it in trust for them.

 They would then make all payments for everything (although you could give them a gift once in a while) and treat it as their own and when their fortunes changed enough or the mortgage came up for renewal or something, it could be transferred to their name but if you do this make sure that you have a document in place that has proper witnessing, etc.

This same thing can be done in Canada to get a property for children and make sure that they sell tax free as a personal residence.

Even without the documentation, if your children are treating the property as their own it is called a constructive trust and is likely theirs tax free if all the money goes to them upon sale (after paying back something yo may have loaned them).

Bill Spohn, a West Vancouver lawyer did send a caveat (that you should have paperwork) to a previous Q & A which I agree with wholeheartedly . He has given it a lot of thought.  You can contact him for some legal advice about how to do the paperwork if you wanted some [email protected].  Please note that his comment was about Canada only and he is not a US lawyer. �