How you can help your children buy their first home

The housing market is tight, house prices are high. It is not easy for young starters to buy a first home. As a parent, you may want to help get the kids off to a flying start on their first home hunt. There are certainly possibilities such as the following below.

No capital, but surplus value

Not everyone has a large amount of money on hand to gift or lend to children. But sometimes you do live in it. If you have lived in an owner-occupied home for some time, the debt on the home has decreased and the value of the home has increased considerably (certainly in recent years). The difference in the market value of the house and the remaining mortgage debt is called equity. With equity you can free up money to help your children buy a house.

Withdraw equity

You can withdraw equity by increasing the existing mortgage or taking out a second mortgage on your current home. The bank will always check whether your income is sufficient for these options.

The money that becomes available after an increase or with a second mortgage can be used again as described above for gifting or borrowing. It is even conceivable that you buy a house that you rent out to your child, but get good advice about this, because sometimes there is no transfer tax when buying a first home and in other cases 8%. This entire process of raising a mortgage or applying for a second mortgage plus setting up a family bank is supervised and taken care of by our advisors. Feel free to call one of them on 020-4651951 or fill in the contact form.

Making capital available

When you, as a parent, have a considerable wealth, that wealth enables you to help your children financially. You can opt for a gift to your child or a family bank construction. Be well informed by a financial advisor so that you can weigh all options properly.

Donation

Taxes often have to be paid on a gift. The exemption for normal gifts from parent to child is € 6,604 per calendar year (in 2021). Then there is the one-off donation that you as a parent can make to a child: € 26,881. This donation is also tax-free and the recipient can decide for themselves what happens with the money afterwards.

One-time donation of €105,302 (the jubelton)

There is also an option for a tax-free gift for the purchase of a house. This type of donation has come to be called in dutch the jubelton. Parents can donate up to €105,302 (in 2021) tax-free to the child. This donation has a number of conditions. The child (being a starter on the housing market) must be between 18 and 40 years old. The amount of the donation must be used for the purchase of the first home.

The maximum amount to be donated may also be donated over the course of three years, as long as the recipient is younger than 40 when the last part of the donation is received. If the child receives the gift before the age of 40, he or she can take two years to actually use the money for the purchase of a first house.

The one-off donation for the purchase of a house does not necessarily have to take place between the parents and the child. Other family or friends can also help a young starter in this way.

The advantage of a donation is that it does not adversely affect your borrowing capacity at the bank, after all, it is a donation and not a loan. This makes it possible to buy a more expensive house, it comes on top of your maximum mortgage amount that you can borrow from a bank.