What you need to know when financially helping your child(ren) buy a home

In 2025, skyrocketing home prices and strict mortgage qualification rules have made it increasingly difficult for young adults to buy their first home on their own. This growing trend reflects both the financial realities facing younger generations and the evolving role of the so-called “Bank of Mom and Dad” in helping them achieve homeownership.

According to CTVnews.ca, “Approximately 40 per cent of the parents of younger homeowners in Ontario say that they helped their children financially with their purchase.”

As a result, parental involvement in home purchases has become the norm rather than the exception. Today, many first-time buyers rely on their parents not just for help with the down payment, but also as co-signers on their mortgage applications, a step often required simply to meet lenders’ income and stress test requirements.

There are two ways that a parent can co-sign on a house for their children:

1. Tenants in Common
   • Ownership can have flexible shares. For example, an owner can own 60 shares while the second owner can own 40 shares.
   • Right of survivorship: There is no right of survivorship. When one owner dies, their shares get passed to whomever they wish as outlined in their will.
   • Transfer of shares: each owner can do as they wish with their shares, independent of what the other owner wishes.
   • This type of agreement is common in business transactions.
      
2. Joint Tenancy
   • Equal ownership: all parties have the same rights to the property, regardless of the amount each person contributed to its purchase.
   • Right of Survivorship: When one tenant dies, their shares go directly to the surviving tenant without going through probate.
   • Transfer of shares: all parties must agree to sell the property or sell their shares.
   • Joint tenancy is commonly used by family members who want to ensure a seamless transition of ownership upon the death of one of the partners.

Keep in mind that your children’s mortgage will reflect as your debt and will impact any of your own personal borrowing needs. And there are other more general risks associated with joint tenancy which we cover here on our site at: www.mcmurter.com/blog/pitfalls-to-avoid-in-joint-property-ownership

From The Globe & Mail, “Parents can also sign a Bare Trust Declaration that shows that they are involved to help with financing. This means that they have no interest in the economic benefit of a property, known as beneficial interest. With the Trust Declaration, the parents would not list the house as an asset, and then they also would not owe capital gains tax when they die.”

According to moneysense.ca, a bare trust exists when someone holds legal title to an asset, but some or all of the asset technically belongs, meaning it beneficially belongs, to someone else.

If a child has lived in the house every year since it was owned, they would avoid paying capital gains tax upon the parent’s death.

We often advise clients who have a family member co-signing on a property to hold title as joint tenancy. This arrangement ensures that if one co-owner passes away, the surviving joint tenant automatically becomes the sole owner of the property. By doing so, the transfer of ownership avoids probate and can help minimize certain tax implications, providing a smoother and more cost-effective transition for the surviving homeowner.

The information provided in this article is meant to inform and to educate. We strongly recommend that if you have legal questions relating to real estate transactions, wills or estates, please reach out to a trusted lawyer for advice.

If you are in the GTA or Durham Region and are looking for an experienced real estate lawyer to help with a real estate transaction or simply to ask a question, McMurter & Associates has the experience to help you succeed.

To connect with a member of our firm, send us an email at info@mcmurter.com or call us at 1-800-756-7138 or 905-666-9200 to schedule a consultation.