Why should I talk to a 13 year old about buying a home? The most they’re interested in is their next video game, social outing or meal! Well, they may be true and teens do live in their own world most of the time. They are beginning to assert their own independence and this time can be a bit like the terrible twos or not. Many parents say this is short lived while many others say it’s a span that lasts years. There are those parents who say the teen years was a point where their child turned into someone they didn’t know.
This time can make talking about the most simple topics complicated. It’s also the time when open communication is the most important. Talking to teenagers about subjects that will affect them as they grow in a positive way, like home ownership, can really benefit both parents and children.
How? Well here are some interesting facts about home ownership that kids may get a kick out of knowing.
Just the Facts Ma’am
Can a Teen Under 18 Own a Property?
Something of interest to note here is that a teen can own property, technically. If a parent puts them on a deed, they can technically be a home owner.
So, isn’t a deed a binding contract? Why yes it is but the parent has all the rights to sell or give away the property for tax purposes, etc. as they see fit.
According to lawyerlocator.com:
Children who are minors (under the age of 18 in most states) can legally co-own real estate with their parents. However, the decision can cause legal complications in the future.
Before parents or relatives add a child’s name to a property title, the adults should talk to a real estate lawyer to understand the legal ramifications of the decision. For example, if the property is being transferred to a child in an effort to shield it from creditors, then the court can void the transfer and creditors can still seize the property.
Often parents or other relatives will add children to a property’s title in an effort to make it easier for the child to inherit the property if the parents die. Unfortunately, this act can complicate things if the parents want to sell the property while the children are still young.
So technically, a parent could buy property for a child and the child will grow up as a homeowner.
Talk the Them About Renting vs. Owning
One of the decisions they may face when they’re older is whether to rent or to buy.
The subject itself has so many nuances that the correct answer really comes down to timing, so the advice you’ll give here shouldn’t be based on any today’s real market. Let the talk center around the advantages and disadvantages of each.
People who rent and like renting do so for many reasons. It comes down to two things: financial situation and preferred style of living. Renting a home can be cheaper than buying a home. Your payments tend to be lower than a comparable house payment when maintenance expenses are added in such as heating/air conditioning or roof repair. Also, your rent may cover some utility costs like water which leads to additional savings.
Home ownership however can lead to financial security that cannot be seen from renting. When you own a home, your monthly payments go to building equity in your home which reduces the amount you owe on your home. This reduction is what increases the equity and that cycle continues as your principal portion of your payment increases slightly every month year after year. It’s lowest on your first payment and highest on your last. There are tax benefits through equity deductions and property tax deductions. Long term buying is nearly always cheaper than renting and in the end, you have a home with no mortgage expense with an equity value of the home’s worth at the present time on the market – which hopefully is higher than the original purchase price.
Should you decide to sell and buy another home you would be exempt from Capital Gains tax, keeping profits of up to app $250,000k if you’re single and twice that if you’re married.
Help Them Grow
When they start hearing these numbers and they start thinking of their future as a homeowner, it can give them confidence as they grow.
Yes they’ll ask questions but there are plenty of resources to help you help them see their future in a bright and positive way. Dave Ramsey is a financial guru who has helped many people get on a pathway to living financially secure and debt free.
Take your child to his site: daveramsey.com/ and see the advice that he gives about teens and money, homeowners and investing for tomorrow.
Need Personal Help?
Realtors, Accountant and your lawyer may also help with advice. We here at Ritz Group Realty would be happy to help give you some backup when talking to your teen or preteen about their future.
You can contact us here and we’ll get back to you about setting up at time to talk.
Our children are our future and our country will be it’s strongest when we have a generation of smart, savvy homeowners using their equity and savings wisely. That’s the type of future we want to see for all teens!