Gifting a down payment to help your child enter the housing market is a generous act. But without the right precautions, this well-meaning gesture could lead to unintended financial headaches, especially if life throws a curveball like a relationship breakdown. Protecting your gift requires thoughtful planning to avoid complications and ensure it’s used as intended.

Start with Solid Documentation

A gift letter is essential. This straightforward document confirms the funds are a gift, not a loan, and satisfies lender requirements. It should clearly outline the amount, your relationship to the recipient, and a declaration that repayment isn’t expected. A little paperwork goes a long way in safeguarding your contribution.

Preparing for the “What-Ifs”

No one likes to imagine a breakup, but it’s a reality worth considering. A cohabitation or prenuptial agreement can ensure your gift stays with your child, not their partner, in the event of a separation. Keep the discussion open, honest, and focused on mutual protection. These measures aren’t about mistrust—they’re about financial wisdom.

For Larger Gifts: Trusts as a High-Level Option

If you’re gifting a significant amount or are part of a high-net-worth family, consider a trust. This advanced option requires legal guidance but offers added control over how and when the gift is used, keeping it aligned with your intentions.

Know the Tax Terrain

Canada may not have a gift tax, but certain transfers—like those involving capital property—can trigger tax implications. Consulting a tax advisor or lawyer can help you avoid surprises and plan accordingly.

Helping your child achieve homeownership is one of the most meaningful ways to support them. By focusing on proper documentation, proactive agreements, and expert advice, you can ensure your gift creates opportunity without unintended consequences. Because when it comes to real estate, it’s not just about giving—it’s about giving wisely.