With rising home prices, the “bank of mom and dad” has been helping many adult children purchase their first home. More parents reportedly are helping their young adult children buy, whether by co-signing on a mortgage, gifting them money for a down payment, or even buying the property outright for them, Bloomberg reports.

Climbing home prices and mortgage rates above 5% are making entering homeownership more difficult for first-time buyers. Further, housing economists have increasingly been pointing to real estate as a way to soften the blow of 40-year high inflation and the advantages of owning rather than paying high rents.

Financial advisers report an increasing number of ultra-wealthy parents who are seeking advice on purchasing homes for their adult children because of the increased cap in the gift and estate tax exemptions, Bloomberg reports. The 2017 Tax Cuts and Jobs Act has doubled through 2025 the amount that Americans can pass on to their heirs tax-free, to just over $12 million for individuals in 2022, while the gift tax annual exclusion amount increases in 2022 to $16,000.

Source: “Parents Are Buying Homes for Kids Priced Out of the Housing Market,” Bloomberg (June 7, 2022)