So your kid wants to buy a home in North Park, South Park, or one of San Diego’s other favorite neighborhoods, and you’re thinking about stepping in to help.
Good news: you’re not alone.
Bad news: doing it the wrong way can lead to taxes, tension—or both.
Why Parents Are Stepping In More Than Ever
With home prices in places like North Park and South Park climbing faster than ever and mortgage rates staying stubbornly high, today’s first-time buyers are facing a serious uphill battle. The typical down payment hit $63,000 in 2024, and monthly mortgage payments are near record highs.
It’s no wonder that, according to a Redfin survey, nearly a quarter of Gen Z and Millennial buyers used family money—whether as a gift or inheritance—to buy their first home.
And while the term “nepo-homebuyer” might make headlines, let’s be real: helping your kid get a foothold in San Diego’s market isn’t nepotism—it’s financial strategy. The key is just doing it right.
At The McT Real Estate Group, we’ve worked with plenty of families trying to balance generosity, smart planning, and local market realities. The difference between a great decision and a costly mistake often comes down to structure and timing.
Let’s make sure you’re set up for success.
3 Smart Ways to Help Your Kid Buy a Home in San Diego
1. Gift Cash (the Right Way)
The simplest approach is often the best: gift your kid cash.
In 2025, you can give up to $19,000 per person (or $38,000 per couple) per year without triggering any IRS reporting. Anything beyond that simply reduces your lifetime exemption (currently $13.99 million per person), and no taxes are due unless you exceed this amount.
If your child is taking out a mortgage, they’ll just need a short gift letter confirming the funds don’t need to be repaid. That’s it.
This route is clean, flexible, and works especially well if your child is buying in competitive neighborhoods like North Park or Normal Heights—where having funds ready to go can make or break an offer.
2. Become the Bank (With Boundaries)
Want to teach financial responsibility and help your child avoid sky-high interest rates?
You can act as the lender and structure a family loan.
Here’s the playbook:
- You lend the money.
- They make regular payments.
- You can even forgive up to $19K each year (per parent), blending a smart loan with annual gifts.
Just be sure to put it in writing. The IRS requires formal loan terms, a repayment schedule, and an interest rate that meets federal standards. Without documentation, your “loan” could be reclassified as a taxable gift.
We’ve seen this strategy work well for parents helping their kids land a starter bungalow in South Park—especially when paired with good legal and financial advice. Have a CPA or estate planner draft the paperwork. It’s worth it.
3. Set Up a Trust (Yes, Even for Normal People)
Trusts aren’t just for ultra-wealthy La Jolla estates. They’re one of the best tools for protecting real estate assets and making sure your generosity doesn’t cause future headaches.
- Revocable Trust: Great for transferring property after you pass—without probate.
- Irrevocable Trust: Offers more protection now (against divorce, creditors, or disputes) and can reduce estate taxes.
If you’re planning to gift a property outright or want to help your kids co-own an investment home in areas like University Heights or Golden Hill, a trust can outline everything clearly—and avoid messy conflicts later.
3 Mistakes That Can Cause Major Problems
1. Adding Your Kid to the Deed
It might sound simple: “Just put them on the title.”
Unfortunately, this move can create massive tax issues and legal complications.
Your child inherits your original purchase price as their cost basis, meaning a significant capital gains hit when they sell. It can also affect your control of the property and expose it to risks, such as divorce or lawsuits.
2. Relying Only on a Will
A will may transfer ownership, but it also sends your estate straight into probate—a slow, public, and expensive process.
A trust bypasses probate entirely and offers flexibility, privacy, and tax advantages.
When the property is in desirable neighborhoods like South Park or North Park, avoiding delays can make all the difference if your heirs decide to sell or rent the home.
3. Selling the House for $1
You’ve probably heard the old trick: “Just sell the house for a dollar.”
Don’t do it.
The IRS still treats it as a gift, and your child keeps your original cost basis, leading to major capital gains taxes later.
It’s confusing, risky, and offers zero protection.
There are far cleaner, smarter options—and The McT Real Estate Group can connect you with trusted local professionals who know how to structure it correctly.
Final Thoughts
Helping your child buy their first home in San Diego isn’t about spoiling them; it’s about giving them a fighting chance in one of the country’s most competitive housing markets.
Whether it’s a cozy North Park craftsman or a modern South Park townhouse, your support can turn an impossible dream into a lasting legacy. But planning matters. The right approach can save thousands in taxes, prevent family friction, and keep your generosity from becoming a legal headache.
If you’d like to talk through your options, The McT Real Estate Group works closely with trusted estate attorneys, CPAs, and lenders who specialize in family-assisted purchases. Helping your kid buy a home should feel good—not complicated.
