With housing prices continuing to rise in Canada, the trend for adult children to move back in with their parents has been growing. But according to a new survey conducted by CIBC, parents would rather give their children money and keep their empty nests empty.
The CIBC gifting poll surveyed 3,021 Canadians online, and found that 65 per cent of parents with children 18 years of age or older would prefer to give their child money instead of having their child move back in with them. Mom and dad are done doing your laundry.
More than half the parents surveyed said that they would, or already have, given their children a financial gift, with 76 per cent of the respondents saying they have or are planning to give their child money to put towards the new house, a wedding or living with a partner.
The high cost of buying a home was the most common reason parents give money to their children, with 23 per cent of parents surveyed saying they would give their children money for housing. Of the parents surveyed, 25 per cent said they would act as a guarantor on a mortgage.
The second most popular reason for a financial gift was for a wedding or cohabitating, with 16 per cent of parents surveyed citing this as their reason.
The national average gift size from parents to their children is $24, 125, with that number jumping to $40,558 for parents who make over $100,000 annually. The CIBC poll also found that approximately 25 per cent of parents give their children more than $50,000.
While it may seem like Canadian parents are open wallets for their children, 55 per cent of the people surveyed said they are uneasy about giving monetary gifts, with 40 per cent of parents surveyed saying they worry they may need the money later in life and 29 per cent of parents revealing they are concerned their children will not be responsible with the money. Out of the parents surveyed, 24 per cent said they would not provide any financial support for their children.
Jamie Golombek, the Managing Director of Tax & Estate Planning at CIBC Wealth Strategies Group, says that understanding how money is taxed, and knowing how much money parents will need in the future makes a big impact on financial gifts. “Almost one in 10 (nine per cent) surveyed incorrectly believe that recipients pay income tax on some or all of the gifts they receive,” said Golombek in a statement. “In fact, the recipient will pay no income tax in Canada on your gift.” Golombek also notes that parents who have money may want to gift it to their children before they die, with probate fees decreasing financial gifts.