[brooklynpotter]

since that has come up before, and will likely come up again, i'd like to ask a question:

is it really that wrong for a parent to buy their child an apartment?

seriously, if i had a child and i could afford to help him/her out, i'd do so. wouldn't you, if you could, like your child (albeit an adult child, but still your child) to live in a nice place vs. the kinds of shitholes first apartments tend to be?

plus, isn't buying property an exceptional investment?

i'm not really understanding the hostility about it, except that it makes the people who have been priced out of the neighborhood pissed off.
_________________
what would you tell me, if i could hear you speaking?--t.r.

[armchair_warrior]

i would too, instead of wasting their money on rent. they would save it for something more important. and it would be also a good investment.

[Rose]

My mother-in-law loaned me and my husband the money for our down payment, so I don't think there is anything wrong with it. I hope I'll be in the position to do the same for my kids.

On the other hand, the day I graduated from college, my father said, "I hope you get a job quickly, because you've gotten the last dollar you'll ever get from me." Which was fine, because I didn't feel like he had any obligation to continue to support me. After college I was a lowly editorial assistant making very very little money, and I was always surprised that my colleagues seemed to be able to afford to go out to lunch every day, buy clothes, take vacations . . . finally I realized that they were all heavily subsidized by their parents. I didn't resent them, I just felt really jealous. It was probably character-building for me to be poor and have to learn how to live on a really strict budget and brown-bag my lunch and so forth, but really, it sucked, and if my kids end up in that situation in their 20s, I will definitely help them out if I can.

[steve]

Doesn't bother me a bit, my parents helped me out plenty, didn't buy me an apt., but I don't resent anyone whose parents did. People who feel like they are priced out of a neighborhood because other people have more money seem to have a more excessive sense of entitlement if you ask me.

[linusvanpelt]

No, buying your adult child an apartment does nothing to undermine their independence, maturity and responsibility. But the three-year-olds running amok at Two Boots: by God, we need to stop mollycoddling them!

I kid, I kid!

I don't see anything morally wrong with "helping out" an adult child. As with so many things about parenting, it's all in how you do it. It's possible to give money to a kid and still have him be a responsible, independent adult, and it's possible to do it in such a way that he never learns to rely on himself.

I never got a dime from my parents for college (scholarships, luck) nor for housing. I'm glad in retrospect because it allowed me to make my own career and academic choices--many of which meant I would make much less money in the future than I could have--without feeling I had to provide return on anyone's investment. Am I proud to have fended for myself? Definitely. Would I have taken a handout if offered? Probably. Would it have changed me? Quite possibly.

Would I do it for my own kids? I think this is one of those questions like, "What would you have done if you lived in Nazi Germany?"--you can answer however you want, but you won't really know until you're in the situation.

[Brooklyn Aphrodite]

ditto to all of the above

but really, i had to post in response to linus' re-introduction of the word mollycoddle to our lexicon.

normally i don't make it a habit to thank people who make me pee in my pants. but some good ole fashioned fun with words - those pants just come off (to wash, you gutter-minded folk! sheesh!)

mollycoddle. linus, you slay me.

[linusvanpelt]

[lp]

No inherent problem with it, though maybe giving them the down payment is a better way to do it so they can manage the mortgage payments.

I do have an issue with parents looking for rental apartments for their children, which is what I think got you started on this - I read the Tampa dad looking for info on Brooklyn apartments that would accomodate his grown son's dog. I mean come on, can't your child find their own rental?

Providing some financial assistance is one thing, doing all of the legwork and taking care of all the details is another.

[JJB]

Oh, enough with the Tampa dude already. He wrote one little post about 4 lines long; you have no idea whether he's really "doing all the legwork and taking care of all the details" for his kid. Maybe he just stumbled upon this site and impulsively decided to post. Maybe his involvement in his kid's apartment search begins and ends with his posts on this board. Maybe there's a really good reason he's helping his kid. Or maybe his kid's just a lame-o ... the point is, there's no way to determine any of that from what the guy has said here.

[miriam]

There is, in my opinion, absolutely nothing wrong with it. If I could, I would be buying apartments and houses for my family and friends who can't afford it, since I have no kids just yet.

I have a dear friend who still lives in a rental with three kids and a boyfriend, father of her children. She was able to borrow and take out a mortgage years ago for her first aparment, but when she divorced her first husband, he tricked he out of the aparment, which was on both of their names. I would buy her a house in a second.

If you buy a place for your child to live in, they still have to take care of all the bills and the upkeeping, which, giving the prices in this city, is not easy either.

[escap]

As was mentioned above, I think ideally the money should be a loan, not a gift. I know it's a separate issue, but after recently reading an op-ed written by Muhammad Yunus (winner of this year's Nobel Prize for his work providing micro-loans), I've been thinking a lot about what he said. Yes, I know that was in the context of helping out the poor, not your kids, but some of the principles he talked about still apply. Namely, receiving a loan instead of a handout builds pride instead of dependency and humiliation (let's face it, who among us is proud to say how spoiled they were by their parents, even if they liked it?); second, and more importantly, when you know you have to pay the money back, you are incentivized to work hard. How many children of privileged parents are complacent and lacking ambition? The lazy 2nd generation is a cliche, largely because the 1st generation, who worked so hard to earn its wealth, imagines it unthinkable that its own children could just sit around playing videogames and smoking doobies. But that's often what happens.

There are various ways to do it: buy the place and have your kid lease it from you with a principal component, so that he's gradually purchasing it; loan him the down payment and have him pay back the interest and down payment over time; or some other alternative. To distinguish yourself from Citibank, you can obviously loan at tiny to zero interest rates, give him a break on the occasional missed payment, guarantee any bank loans he takes out, etc. But overall, in principle, I think by framing it this way you're giving your kid both a financial gift and the gift of teaching him responsibility. That's my intention, at least.

(btw, didn't mean to be gender-biased, I just didn't want to write he/she again and again)

[brooklynpotter]

i don't know. loans between family and friends can get very, very tricky. personally, i've never loaned $$. if someone has needed it i've decided either to give it to them or not. i don't believe in putting that kind of pressure on any type of non-professional relationship.

the fact is, things happen... and when do you renegotiate?

it can quickly become an ugly quagmire.

i'm certainly not saying we should give give give without thinking of the consequences, but if you're trying to "teach" your adult child something, shouldn't that lesson have been learned a long, long time ago?
_________________
what would you tell me, if i could hear you speaking?--t.r.

[jennitrixie]

On the other hand, if they had learned that lesson long ago, perhaps they either wouldn't need someone to give them a house, or would have too much pride to accept the offer (and the implied beholdeness)?

[brooklynpotter]

[kensingtonmom]

When we bought a coop several years ago, we were the only new buyers in the place whose parents hadn't bought the place or at least put the downpayment down on the place for them. I would say that we, in some ways, valued the purchase more since we had sacrificed to save for a downpayment. I was the president of the coop and cared a lot about the place while some of the other people were lets just say slackers. But we did end up having to borrow 5k from my stepfather to help with the closing costs which we hadn't really factored in when we started to save.

But is there something wrong with parents buying kids property? No obviously not. When I was in high school some kids saved and bought themselves a used car and some kids' had parents who bought them a new car.

I think it just unlevels the playing field further and makes it harder for people who are TRYING to save. Buying property is getting harder and harder for first time buyers. But when a parent can step in and pay cash for a place and immediately outbid middle class people (as happend to us three times on our hunt for a house) it sends a message that 500k is an acceptable price for a one bedroom coop and the realtors will continue to push that envelope further--knowing that there are parents who can step up with the cash.

[linusvanpelt]

[brooklynpotter]

[linusvanpelt]

[kensingtonmom]

[friendlypitbull]

While I agree with you that the repeal of the Estate Tax is beyond stupid; it is historically inaccurate to say that our 'founding fathers' institutued it to redistribute wealth. Throughout most of our early history our country had no estate tax and when one did exist it was minimal.

[escap]

[Jack Krohn]

While I see nothing inherently wrong with a parent buying an apartment for a child, there is still a part of me that looks down on the child for not wanting to grow up and stand on his or her own two feet. My wife and I scrimped and saved for years to buy our home and received not one penny from family. And our income is very modest, so it's not like we simply used our bonus checks. It was hard work and we gave up nearly everything in order to buy. Now that we own, however, we feel a sense of pride knowing that we did it by ourselves.

[doctorj]

The thing is: my parents' generation could afford to buy a nice house in a nice neighborhood straight out of college on one income. No way have incomes kept up with real estate prices. Everyone has to live somewhere; all that's really happened during the housing boom is a redistribution of wealth from the young to the old, from those who didn't own before to those who did. The benficiaries, middle-class baby boomer homeowners, are basically faced with two choices: hand over real estate (or equity thereof) to their kids before they die, or after. Sooner or later, the wealth will flow back in the other direction, plus or minus estate taxes.

When you look at it in those terms, wouldn't you rather provide a downpayment now and be around to see the kids make a home of their own?
_________________
The world will little note nor long remember what we say here. -- Abraham Lincoln

[escap]

Does anyone know what the tax implications are? I believe that the gift tax kicks in after $10K per parent per child, but does buying your kid a house count as a gift? If so, you're saddling your kid with one gigantic ass tax burden (isn't it around 50%?); if not--Holy tax loophole for the rich, batman!! What's to stop people from just gifting their entire inheritance in the form of real estate or some other non-taxable asset to their kids to escape the "death tax"?

If indeed you do have to pay draconian taxes if your parents buy you a house, then my loan idea seems a lot more enticing.

[brooklynpotter]

[kensingtonmom]

[escap]

[doctorj]

[escap]

[doctorj]

[stacey]

[escap]

This is very interesting, I'm intrigued. If you can really place a downpayment on property without a gift or transfer tax coming into play, this is a serious tax loophole. With average apartment in Manhattan now at over a $1 million, this means you can essentially gift $250K or much much more to your kids without any taxes being taken out. If you're allowed to buy them property outright, then we're talking about a loophole in the millions. What is the estate tax at this point, around 50% or so, right? That kind of massive exception doesn't seem possible. There's got to be a catch. I'll ask around and post back if I can find out the answer.

[Anotherdayinbkln]

Why Is This Girl Riding the Subway?

JAP: Oh my god, I can't wait to move into the city. I can't take my house anymore, my parents are always up my ass. Gabby, what time will you be home? Gabby, don't forget to tell Rosa to pick up your dry cleaning! Gabby, we're paying your tuition, you can't treat this house like a hotel! It's so annoying! I just wanna be on my own, I can take care of myself, I don't need them constantly doing stuff for me!
Friend: Yeah... So where were you thinking of moving?
JAP: I dunno, my dad said he might let me move into his apartment on 89th. Either that, or a partner at his firm is selling a co-op that he might buy for me. He said I can choose.

--Uptown W train

courtesy of http://www.overheardinnewyork.com/archives/007640.html

[stacey]

[doctorj]

Great to see we've shifted emphasis from the mundane topic of helping out kids to what's really important in life: tax minimization.
_________________
The world will little note nor long remember what we say here. -- Abraham Lincoln

[Merry May]

What's wrong with Bushwick? Even a home there now is $600 or 700K How is it worse than other areas like East NY, Brownsville, or Flatbush.

It's close to the city, and there are all these articles about it being the next hip neighborhood.

I'm just confused as to why it has all these negative images. I don't see gangs, or guns there.

Anyone care to enlighten or agree with me?

[kensingtonmom]

[linusvanpelt]

[doctorj]

[kensingtonmom]

[linusvanpelt]

[kensingtonmom]

[escap]

The greatest redistribution of wealth in history is actually scheduled to take place in the near future, as the baby boomers retire and begin to collect social security. Vast sums are about to be transferred from the working young to the retired elderly, so I guess in light of that perhaps if the old folks throw us a down payment or two we've got it coming to us.

Separately, I think linusvanpelt makes a great point. It's certainly the case that you can make a legitimate choice to pursue a low-paying career for a host of good reasons; however, once you've made that choice I'm not sure that it's fair to expect to be subsidized by others. And doctorj, I'm not really clear on how the macro, transgenerational issues that you're raising have anything to do with the relatively simple question over whether buying your kid a house constitutes spoiling them.

The fairest answer is probably that it depends on the nature of the individual relationships in question, I suppose.

[doctorj]

[escap]

Ah, in that case I do see your point. Obviously a bit of a generalization but certainly the baby boomer generation should be thankful of what they've had.