The Condo Generation


Thinking about buying your kids a condo? You’re not alone. According to the 4th TD Canada Trust Condo Poll, 10% of parents would contemplate buying a condo for their adult children.

The poll revealed that condos with their low maintenance needs compared to homes is the biggest motivation for Canadians (36%). Affordability comes in second as the most popular reason for condo purchases nationally (24%). Interestingly, in Vancouver, affordability is the primary reason for condo purchases (45%, up from 35% in 2009) – more than double the city’s second place reason to purchase a condo: lower maintenance (21%). This is a different story in Halifax since affordability is not a major reason to purchase a condo with only 5% saying price is the deciding factor.

Essentially, it makes sense. By forking over the down payment and encouraging your child to pay the monthly mortgage costs, you’re not only helping your child get into the housing market but you’re potentially securing a sound investment or retirement property for yourself.

If you’re considering taking this route, make sure you’re entering the transaction with your eyes open. For example, if the condo is in your name – and it’s your second residence – you could end up paying a lot in capital gains tax when it comes time to sell if it appreciates in value. For that reason, it might make more sense to put it in your child’s name.

Secondly, if your child will be carrying the monthly costs, make sure the mortgage payments fit into their monthly budget. Remember that condo fees can really cut into a young person’s monthly cash flow, so make sure they consider them – along with other monthly expenses – when devising a budget.

Lastly, make sure you’re in it for the long haul. In most markets across the country, chances are a condo you purchase today won’t appreciate a lot over the next few years. Factor in real estate fees and it makes much more sense to purchase something that will stay in the family, or be able to be rented out, over the next decade or so.