Insights & Resources

Helping an adult child buy a home can be a meaningful use of retirement savings. The amount you can transfer, however, is not necessarily the amount you can afford to give. A contribution may leave your regular bills covered while reducing the money available for later care, a major repair, or help for another child.

The decision becomes clearer when you consider the whole commitment: what your retirement needs to retain, what your child needs the help to accomplish, where the cash will come from, and whether you expect repayment.

Start with what you need

Your savings already support a set of commitments. Some cover the gap between retirement income and everyday spending. Others provide flexibility for expenses that do not arrive every month. Before promising a contribution, review your retirement plan with that money removed.

That review should reflect the life you want to maintain, not just the bills you could manage at a minimum. It should also consider what happens if investment growth is lower or spending needs are higher than expected. If the gift fits only when everything goes well, identify what you would have to change when conditions are less favourable.

Plans to help other children belong in the same calculation. Equal amounts at the same time are not the only possible approach, but money reserved for a later gift cannot also be counted on for your own spending. Both partners should understand the trade-offs before making an offer.

The result may be the amount you first considered, a smaller contribution, or a decision to wait. A large portfolio alone does not settle the question.

Separate buying from carrying

A child who can cover the ongoing costs of ownership but lacks a down payment has a different need from a child who will also need help with monthly bills. A one-time gift may close the first gap without resolving the second.

Consider the complete purchase and household budget: the child's own savings, proposed borrowing, buying and moving costs, mortgage payments, property taxes, insurance, utilities, and upkeep. The useful comparison is between that budget and what the child can pay without support you have not agreed to provide.

If ongoing help is needed, agree on its amount and end date before the purchase. Your child also needs a workable plan for when that support stops. An expected pay rise is not the same as income already available to cover the bills.

If your child's needs and your own limit do not meet, the home, timing, or form of help may need to change. Increasing the initial cheque does not necessarily make the ongoing commitment manageable.

Compare the cash after tax

The account used to fund the contribution affects how much you give up to put cash in your child's hands. Compare the amount available after allowing for any tax, rather than treating every account balance as equally spendable.

An ordinary TFSA withdrawal is tax-free. The withdrawal amount is added back to contribution room in the next calendar year, but that room does not restore the savings you gave away. You need other money to replenish the account. Check available contribution room before putting money back.

Selling investments outside registered accounts requires a different calculation. For ordinary investments held as capital property, it is the gain, not automatically the full sale proceeds, that raises the capital-gains tax question. The adjusted cost base and applicable selling costs help establish that gain. Estimate the tax for the investments being sold and your own circumstances before committing the cash.

An ordinary RRSP withdrawal is generally taxable. Here too, the amount withdrawn may be more than the amount available to give. Cash needed for the resulting tax bill cannot also be included in the gift.

Tax-free does not mean affordable, and a taxable source is not automatically unsuitable. The funding choice needs to fit both the contribution and the retirement savings you need to keep.

Define the monthly commitment

Monthly support can look modest beside a lump sum, but its duration and terms matter. A fixed contribution with an end date is a different promise from covering a bill of any size for as long as it continues.

If the support pays interest on a line of credit, interest payments alone do not reduce the principal. Your child still needs a way to repay the amount borrowed. Line-of-credit rates can also change, so a promise to cover all interest may become more expensive. With a fixed monthly limit, the family needs to agree that the child will cover anything above it.

Your own plan should account for the possibility that your spending needs rise while the support continues. Your child's budget should account for the support ending without the hoped-for improvement in income.

Co-signing as a joint borrower is a separate commitment. A joint borrower becomes equally responsible for repaying the unpaid balance. That responsibility is not capped at the monthly help you intended to provide. Read the credit agreement and include the debt you could have to repay in the affordability review before signing.

Be clear about repayment

A gift and a family loan require different expectations. With a gift, your retirement plan needs to work without the money returning. With a loan, both sides need to agree on when and how repayment will occur.

Be candid with the mortgage lender. An arrangement should not be described as a non-repayable gift if the family privately expects repayment. Confirm how the lender will treat the actual arrangement before relying on it to complete the purchase.

For a family loan, a lawyer can help document the amount, repayment terms, and any interest, and address what happens if the child sells, misses payments, dies, or experiences a relationship breakdown. Ask whether security against the home is possible and appropriate, and how it would fit with the bank lender's requirements. Written terms or proposed security are not a guarantee of repayment.

Legal advice also matters when giving money. Do not assume that a contribution remains protected simply because it came from a parent. Discuss the child's circumstances and the intended arrangement with a lawyer before transferring funds, rather than relying on a general rule about gifts.

If you expect loan repayments to fund your own spending, test what happens if they arrive late or stop. Calling the contribution a loan does not make the money available whenever you need it. The outcome may be to lend less, give a smaller amount, or wait.

Make an offer that fits

Before money moves, bring the decisions together: the amount you can commit, the account and tax cost, any monthly limit and end date, and what you expect to receive back. Include intentions for other children and discuss with a lawyer how help now should fit with your estate wishes.

A clear offer lets both households plan around the same commitment. It also makes it easier to change the amount or timing before anyone has relied on a promise that the full retirement picture does not support.

For professionals and families considering help with a child's home, our planning work connects that decision with retirement income, account choices, and family priorities. To discuss your situation and explore whether our approach is a good fit, book an introductory conversation.