Feb 14, 2026
With the rising cost of living, inflation, and high interest rates and home prices, many young people receive financial help from their parents. Pew Research Center reported that 44% of children aged 18 to 34 had some form of financial help from a parent as of 2024 (1).
But as those parents near retirement, they may struggle with wanting to help their kids, but worrying whether they are financially stable enough to do so.
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Imagine Gordon, who is 64 and plans to retire next year. He lives in a higher-cost-of-living city on the West Coast, and he has about $400,000 in retirement savings. The home he lives in is worth $1.1 million, but he still has $200,000 on his mortgage.
He purchased a rental property in a lower-cost-of-living city in the Midwest, where his two adult children live, about five years ago. His short-term plan was to rent the property to boost his retirement savings, income for him in retirement, and possibly move there when he was older to be closer to his family.
The rental property currently generates enough income to cover expenses and the mortgage, but not much more. Gordon’s son recently asked him if he could move into the rental property with his wife, but there’s a catch — they want to pay less than the market rate for the home.
Gordon is torn; he wants to help his son move into a bigger home, but the rent that his son is offering won’t cover the mortgage payments. While Gordon does plan on leaving his entire estate to his two adult children, he also wants to make sure that he can fully fund his retirement and have savings for any unexpected expenses such as emergencies or long-term care.
Helping kids has its costs
One of Gordon’s first considerations should be that tax rules around renting property to family members will see him lose additional money.
Landlords renting out dwelling units are able to deduct certain expenses. But if you are renting to a family member for below-market value, the IRS classifies this as “not rented for profit,” and you cannot deduct rental expenses (2).
Along with the financial hit that Gordon will take if he proceeds with his son’s proposal, there is also the chance that conflict could arise from entering into a landlord-tenant relationship with his son. Dealing with late rental payments or maintenance issues could become complicated with the added layer of the offending party being a family member.
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If Gordon does decide to rent his property to his son, he should be sure to formalize things with a written rental agreement. Even if he decides to rent to his son at below-market value, it’s still a good idea to have things like the agreed-upon monthly rent and payment schedule on the record.
If Gordon decides he will rent to his son, but charge fair market value, the rental agreement should also include tenant responsibilities and security deposit details, so that it stands up as a formal agreement in case he comes under IRS scrutiny (3).
Gordon should seriously consider whether his retirement savings can take the hit that renting to his son for below-market value would mean. Running the numbers with a financial advisor could help him understand a few different scenarios and see what he can manage.
If his decision is that he cannot afford to offer him below-market rent, Gordon could suggest other ways he might be able to help that are less costly. He might also consider sharing his retirement and estate plans with both his sons, so they know Gordon’s plans for his retirement years, and what he hopes to leave his sons when he passes away.
While discussions about estate planning can be uncomfortable for some people, knowing what they might expect can help your children plan their futures.
Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
Pew Research Center (1); IRS (2); Advantage Property Management (3).
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Rebecca Payne has more than a decade of experience editing and producing both local and national daily newspapers. She's worked on the Toronto Star, the Globe and Mail, Metro, Canada's National Observer, the Virginian-Pilot and Daily Press.
