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Navigating Home Buying Support for Your Children: A NiSource Employee's Guide to Avoiding Tax Pitfalls in California

NiSource employees, especially those nearing retirement, should consider utilizing tax-efficient methods such as gifts, loans, or co-signing arrangements to support their children's home purchases in California’s competitive real estate market, while also staying mindful of changing IRS guidelines that could affect long-term financial goals. – Tyson Mavar, a representative of The Retirement Group, a division of Wealth Enhancement Group.

NiSource employees should evaluate the long-term financial impact of helping their children buy property, considering the tax implications of gifts, loans, and co-signing, while also ensuring these strategies align with their retirement plans and estate goals. – Wesley Boudreaux, a representative of The Retirement Group, a division of Wealth Enhancement Group.

In this article, we will discuss:

The impact of California’s real estate market on financial planning – How market trends, tax laws, and family financial strategies influence home ownership.
Strategies for assisting children in purchasing a home – Exploring various financial methods, such as gifting, co-signing, and investment properties.
Tax implications and legal considerations – Understanding IRS guidelines, gift tax exclusions, and estate planning factors when supporting home purchases.

The real estate market in California is complicated but reflects broad trends that affect many, including NiSource employees considering long-term financial planning and intergenerational wealth transfer. Understand tax law, real estate laws and family finance strategies. This guide examines how families negotiate home purchases - from financial, tax and legal points of view.

A hot market with high property costs, the Bay Area often sees first-time buyers Tommy Ufland and Tori Olsen pass on all-cash offers despite being prepared. So eventually Ufland and Olsen purchased a condo from Olsen's relatives at market price.

In California, relatives typically help first-time buyers - about 27% of purchasers in 2024 received such aid - down from 34% in 2023.

Real estate professionals estimate this could rise to 50% in highly competitive markets like the Bay Area.

Family members often give gifts to help with property purchases, even if the gifts are tax-impacted. According to 2025 Internal Revenue Service guidelines, for example, someone could gift USD 19,000 per person annually without paying gift taxes.

Therefore, a couple may jointly give USD 38,000 to their child and spouse with no immediate tax consequences, but this reduces their lifetime gift and estate tax exemption and may require a gift tax return for amounts above this amount.

There are various strategies that parents can use to help their children buy real estate - each with benefits and drawbacks:

Down Payment Direct Gift: This is a simple one - parents gift the down payment so the money can be used as intended and no more financial problems arise.
Down Payment via Parental Loan: This involves lending the down payment to the child in a formal agreement with interest at or above the federal rate, not a gift.
Co-signing a Mortgage: This may help children get better loan terms but puts the parents in a position to be financially liable if the child defaults.
Purchasing Outright for Cash: Some affluent parents buy a home outright and let their children refinance into a conventional mortgage later on, giving them ownership back.
Investment/Rental Properties: This option allows parents flexibility in financial arrangement and tax considerations as parents buy a property as an investment and rent it to their child under standard tenant agreements or as a second home.
Joint Ownership: Parents and children can buy property together in legally defined ownership shares and responsibilities, controlling and financing input but with specific legal structuring.
Selling a Family Home: Parents may sell their home to their child below market value to save on transaction fees and get the child familiar with the property, but this may increase property and gift taxes.

Every method involves particular taxes, legal rights and financial responsibilities that should be considered and discussed with legal and financial professionals. Picking one depends on the family's financial picture, the real estate market and long-term financial goals of parents and children.

And they reflect broader economic and fiscal conditions that may affect investment strategies and purchasing power, such as changes in IRS rules or market movements that may affect the outcomes of each approach.

Understanding such methods as well as their consequences allows sound decisions in the context of short- and long-term financial realities and health. Professional guidance can explain these options and assist in achieving financial goals and ensuring regulatory compliance.

The SECURE Act 2.0 passed in December 2022 is big news for NiSource employees approaching retirement. It affects retirement and tax planning by raising the age of required minimum distributions and allowing penalty-free withdrawals for first-homebuyer down payments - and will affect financial planning for children's real estate goals.

Help your grown children buy a home in California while handling tax considerations. This article details strategies to limit gift tax consequences and maximize financial results, including co-signing mortgages, parental loans and direct gifts. Understanding relevant federal rates and IRS rules helps NiSource employees structure transactions to help family members in California's competitive real estate market.

Helping your adult child buy a home in California tax-efficiently involves understanding tax regulations, mortgage details and financial strategies. Everything from using IRS gift exclusions to choosing the right loan or co-signing arrangement must be in line with financial and legal objectives.

Five different sources are listed below with a 100-word explanation of how the source benefits retirees, supports the arguments made, the author name, publication date and references to pages cited.

Articles you may find interesting:

.Sources:

1. Internal Revenue Service. Estate and Gift Tax FAQs. IRS, Sept. 2024.

2. Zillow. California Housing Market: 2025 Home Prices & Trends. Mar. 2025.

3. NerdWallet Staff. Gift Tax: 2024 and 2025 Annual and Lifetime Limits. NerdWallet, Feb. 2025.

4. Redfin. California Housing Market: House Prices & Trends. Feb. 2025.

5. Internal Revenue Service. Frequently Asked Questions on Gift Taxes. IRS, 28 Oct. 2024.

As an employee of National Grid, what are the key eligibility criteria for participating in the Pension Plan specifically for Niagara Mohawk Power Corporation employees? How might these criteria impact your personal retirement planning and the benefits you expect to receive upon retirement from National Grid?

Eligibility Criteria for Niagara Mohawk Pension Plan: Employees of Niagara Mohawk Power Corporation who are represented by Local Union 97 of the IBEW and work at least 20 hours per week or accumulate 1,000 hours in a Pension Plan year are eligible. Participation begins automatically on the first day of employment. These criteria directly impact retirement planning by determining when employees begin accruing pension benefits and how much they will receive at retirement(National_Grid_2023_Niag…).

Within the framework of the National Grid Pension Plan, how does the cash balance formula work in calculating retirement benefits, and what implications does this have for employees of Niagara Mohawk Power Corporation when considering their long-term financial outlook?

Cash Balance Formula: The National Grid Pension Plan for Niagara Mohawk employees uses a cash balance formula that provides monthly pay-based credits (starting at 4% and increasing with years of service) and interest credits. These accumulate in a hypothetical account, growing until retirement, allowing employees to track their retirement benefits much like a savings account. This formula impacts financial outlook by providing predictable growth tied to service and pay(National_Grid_2023_Niag…).

For employees at National Grid, what are the specific rights and options available during the pension benefit application process? How do these rights protect the interests of individual employees and ensure they receive fair treatment under the Niagara Mohawk Pension Plan?

Pension Benefit Application Process: National Grid employees must apply for their pension benefits by submitting the required forms at least 90 days before retirement. Spousal consent is required if opting for any form of payment other than the default. This ensures employees understand and select the best payment option for their circumstances, protecting their interests under the Niagara Mohawk Pension Plan(National_Grid_2023_Niag…).

Given the different types of credits that contribute to the pension benefit for employees of National Grid, how are Pay-based Credits and interest credits calculated? What strategies might Niagara Mohawk Power Corporation employees employ to maximize these credits before retirement?

Pay-based and Interest Credits Calculation: Pay-based credits are determined by years of service, starting at 4% of pay and increasing to 8% after 20 years. Interest credits are based on an annual interest rate tied to the Treasury securities and corporate bond rates. Employees can maximize these credits by continuing to work and contributing to their pension balance(National_Grid_2023_Niag…).

How do pension benefits work for Transition Group Employees specifically within National Grid's framework, and what unique provisions apply to them under the Pension Plan as compared to regular employees of Niagara Mohawk Power Corporation?

Pension Benefits for Transition Group Employees: Transition Group Employees under the National Grid Pension Plan have benefits calculated using both the former final average pay formula and the cash balance formula, with the greater benefit being paid out. This differs from regular employees who only receive benefits calculated under the cash balance formula(National_Grid_2023_Niag…)(National_Grid_2023_Niag…).

What are the repercussions for National Grid employees in terms of benefit loss or limitation if they have not met the Vesting requirements under the Niagara Mohawk Pension Plan? How can understanding these repercussions influence an employee's decision-making regarding their career and retirement?

Impact of Vesting Requirements: Employees must complete three years of service to become vested in the Niagara Mohawk Pension Plan. If they leave before vesting, they lose all accrued pension benefits. Understanding vesting requirements is crucial for career and retirement planning, as it ensures employees retain their pension benefits if they meet the criteria(National_Grid_2023_Niag…).

As a current employee at National Grid, what does the termination of the Pension Plan imply for accrued benefits under the Niagara Mohawk Pension Plan? Specifically, how do federal protections through ERISA and the Pension Benefit Guaranty Corporation come into play for employees seeking assurance regarding their retirement funds?

Termination of Pension Plan and Federal Protections: If the Niagara Mohawk Pension Plan is terminated, accrued benefits are protected by ERISA and insured by the Pension Benefit Guaranty Corporation (PBGC). Employees can feel assured that their benefits will be secured up to the PBGC's limits in case of plan termination(National_Grid_2023_Niag…).

How does the National Grid Pension Plan accommodate the unique situations of employees during times of disability or military service, and what steps should Niagara Mohawk Power Corporation employees take to ensure their benefits continue during these periods?

Disability and Military Service: Niagara Mohawk employees receive service credits during periods of disability or military leave, ensuring continuous pension accrual. Employees should ensure their disability or military status is properly documented with the company to avoid interruptions in their pension benefits(National_Grid_2023_Niag…).

When considering the various forms of pension payments available to retirees from National Grid, what are the potential advantages and disadvantages of choosing an annuity versus a lump-sum payment for employees from Niagara Mohawk Power Corporation?

Annuity vs. Lump-Sum Payment: Retirees at National Grid have the option to choose between an annuity, providing a steady income for life, or a lump-sum payment. The annuity provides financial stability, while a lump sum offers flexibility. The choice depends on individual financial needs and retirement goals(National_Grid_2023_Niag…).

For those looking to gain further clarity on the nuances of the Niagara Mohawk Pension Plan, what are the most effective ways for employees to contact National Grid for assistance? How can engaging with the Pension Service Center enhance an employee's understanding of their benefits and rights?

Contacting National Grid for Pension Assistance: Employees seeking more information about their Niagara Mohawk Pension Plan can contact the National Grid Pension Service Center or use the online pension modeler. Engaging with the Pension Service Center provides personalized guidance, helping employees understand their benefits and make informed decisions(National_Grid_2023_Niag…).