Happy Graduation! Here’s Your New Home.

Over the last year, more parents have been purchasing apartments or condos to give to their children. These parents want to take advantage of dropping real estate prices and low interest rates while also viewing the purchase as an investment. Brokers are seeing that most of these real estate gifts are often studios or small one-bedroom condos.

“The parents see it as a long-term investment and a good place to park their money,” Barry Silverman, an executive vice president of Halstead Property, told The New York Times. As for how the “gift” of real estate is structured, some parents buy it as a gift for their children and take advantage of tax gift exclusions, others buy it as an investment property and retain ownership, and some are buying it through a family trust or joint ownership. In some cases, the parents don’t even live in the city but are buying the condo for themselves so when the child decides to move on, they can move in.

Richard Koenigsberg, a certified public accountant, says it’s a good time to be purchasing property as a gift because of some tax exclusions on gifts. “We are in a remarkable period of time at the moment,” Koenigsberg says. The tax exclusion on gifts and estates has increased to $5 million from $1 million until the end of 2012. In other words, a parent can give a child as much as $5 million tax-free. “It’s a big opportunity for parents who might want to help their children,” Koenigsberg says.