In today's housing market, making an offer can feel as nerve-wracking as standing before the Supreme Court. No wonder more and more parents are stepping in to help their adult children become homeowners. In 2024, nearly 1 in 3 first-time buyers in Canada received financial support from family, with the average gift topping $77,000.1
But like any contract, an early inheritance needs structure. A generous impulse can backfire if it's not backed by a plan.
So how do you turn a well-meaning gift into a smart, sustainable family strategy? Let's break it down.
The dream of homeownership is slipping away
There's no way around it: for many young adults, buying a
home feels out of reach. Housing prices have skyrocketed, and
incomes haven't kept pace. Thirty years ago, the average
Canadian home cost 4.9 times the average family income. Today, that
same home will cost the average family 8.4 times more than they
earn.2
That's why, in Ontario at least, today's average
first-time homebuyer is 40 years old.3 And
it's why so many homebuyers rely on their families for
help.
When done right, an early inheritance can do more than ease a financial burden. It can make homeownership an actual possibility for the next generation—and support a smoother transfer of family wealth.
3 ways to structure an early inheritance
1. The direct gift
The simplest method is also the most popular: give your child money
to put toward a down payment. Cash gifts aren't taxed in
Canada, but it's still crucial to document everything.
Clarity now can prevent conflict later.
2. The family loan
Prefer to keep things formal? A loan—whether interest-free or
not—can provide the same immediate support without shrinking
your estate. Just make sure you draw up a proper contract to avoid
any misunderstandings down the road.
3. Property co-ownership or
transfer
Some parents opt to invest directly in a child's home as a
co-owner, which can offer added legal protection. Others
(Editor's note: not my parents, despite my many phone calls)
choose to transfer ownership of their primary residence—a
gift that can help avoid probate fees.
Whichever path you choose, planning is key. And no matter how close your family is, a clear discussion of roles and responsibilities is non-negotiable.
A surprisingly un-taxing decision
Giving during your lifetime isn't just generous. Here's how it can be a smart tax move.
Lower estate taxes
Early gifts can shrink the taxable value of your estate.
Capital gains strategy
Transferring certain assets now might reduce the future tax hit for
your heirs. But be cautious—poor planning could lead to
hefty, immediate tax bills
Tax-free gift
Unlike an estate, a well-structured gift can be completely
tax-free.
Heir on the side of caution: avoid these mistakes
Even the most well-intentioned plan can go sideways. Here are three common missteps to avoid:
Forgetting your own needs
Before you give, make sure you've secured your own long-term
financial health—especially in retirement.
Not putting it in writing
A handshake isn't enough. A loan or gift should come with
clear documentation.
Ignoring life's left turns
Like divorce. Depending on how your gift is structured, it could be
considered family property in a separation. A little foresight now
can prevent major headaches later.
Footnotes
1. Canada Mortgage and Housing Corporation, 2024 Consumer Survey
2. Rates.ca, “Then and now: How much more expensive is it to buy a home in 2024 vs. 1994?” June 10, 2024
3. Ontario Housing Market, “New data shows Ontario's first-time homebuyers are now 40 years old.” April 25, 2025
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
