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As home prices climb and mortgage rates rise, many parents are stepping in to help their children purchase their first homes. Financial experts point to several tax‑advantaged methods for providing such support.
According to a LendingTree survey of roughly 2,000 consumers conducted in March 2026, 40 % of homeowners reported receiving down‑payment assistance, up from 35 % in 2023. The trend is especially pronounced among younger buyers: 78 % of Gen Z and 56 % of millennials said they had received help.
Family remains the primary source of this financial boost, particularly for younger buyers, LendingTree found.
Additional research highlights the financial strain on younger generations. A January 2026 Northwestern Mutual study of 4,375 U.S. adults found that 31 % of Gen Z and 24 % of millennials have postponed buying a home because of financial challenges.
“We see it frequently with first‑time homebuyers. The kids can’t afford the down payments, so Mom and Dad—or even grandparents—want to help out,” said certified public accountant Tim Steffen, director of advanced planning at financial services firm Baird.
Inheritances traditionally materialize around age 60, but earlier transfers can provide younger adults with critical support when they have fewer resources, according to Vanguard research.
“Some investors prefer to give with a ‘warm hand’ so they can see the benefits while they’re still alive,” said certified financial planner Abigail Gunderson, senior wealth advisor at Tanglewood Total Wealth Management in Houston.
If you’re considering a down‑payment contribution, here are essential points to keep in mind, as advised by financial professionals.
Gift and Estate Tax Exclusions Overview
When you give assets to children or other relatives, you typically won’t incur a tax liability, experts note.
For 2026, the annual gift‑tax exclusion allows you to give up to $19,000 per recipient without filing a report with the IRS. Gifts above this amount generally require a gift‑tax return. Married couples can combine their exclusions to $38,000 by electing gift‑tax splitting.
“You could do it in December and do it again in January,” Steffen suggested, noting that gifting near year‑end and early the following year can effectively double the exclusion.
Even if you exceed the annual limit, most individuals won’t face gift or estate taxes, Steffen added.
The lifetime federal estate and gift‑tax exemption for 2026 is $15 million per individual, or $30 million for married couples filing jointly. Estates below these thresholds avoid the top 40 % federal estate tax.
Annual gifts that stay under the exclusion don’t count against the lifetime exemption. Payments made directly to educational or medical institutions for qualified expenses are also excluded from the lifetime calculation.
Lifetime Gifting Strategies Compared to Inheritance
When planning how to transfer wealth, it’s important to evaluate the specific asset, any built‑in gains, and the type of account holding the investment.
“If you’re older and hold appreciated brokerage assets, you may want to retain those investments until death rather than gifting them early,” said Gunderson.
Inherited assets receive a step‑up in basis, resetting the cost basis to the asset’s fair market value at the date of death. This can eliminate or reduce capital‑gains tax if the heirs sell the assets soon after receiving them.
Conversely, assets gifted during life carry a carryover basis, meaning the original purchase price remains the reference for calculating gains. However, if the recipient has a low income, long‑term capital‑gains tax can be as low as 0 %.
In 2026, single filers can earn up to $49,450 of taxable income—$98,900 for married couples filing jointly—while still qualifying for a 0 % long‑term capital‑gains rate.
Taxable income is computed by subtracting the larger of the standard or itemized deductions from adjusted gross income. Any profit from the sale of appreciated assets must be included in that calculation.