Should You Let Your Adult Kids Move Back Home?

For many parents, the day that their child leaves home to start a life of their own is bittersweet. Equally bittersweet, then, is the day that child moves back in. 

For decades, adult children tended to stay away from their childhood home once they moved out, but the percentage of 25-34-year-olds living with their folks rose steadily from the 1980s until the pandemic. Today, about 18% of that Gen Z/millennial cohort lives in a parent’s home, and their reasons for doing so range from unemployment and housing costs to simply wanting to.

There are lots of emotional and logistical factors to consider when welcoming an adult child to live with you, but the financial stakes cannot be overlooked. Here’s what to consider from a financial perspective if a child is looking to come home. 

The daily budget impact goes both ways

An extra person in your household means immediate changes to your monthly budget, and those changes can swing in either direction depending on how you structure the arrangement.

On the positive side, adult children can meaningfully contribute to household finances. They might pay rent, chip in for groceries, cover their portion of utilities, or handle expenses like streaming services and Wi-Fi. Beyond direct financial contributions, they often take on valuable responsibilities like yard work, home maintenance, and repairs—tasks you might otherwise pay someone else to do.

"Make sure there are set house rules that ensure adult children take responsibility for certain tasks," says Austin Kilgore, an analyst with the Achieve Center for Consumer Insights. "For example, in most cases, they probably should still be in charge of their own laundry and likely meals, and help with housework and yard work. Be as specific as possible."

But without clear expectations, the financial impact can tilt sharply negative as utility bills rise and grocery costs increase. If your adult child isn't contributing financially or through household labor, you're essentially subsidizing their lifestyle—and for parents nearing or in retirement, that can derail carefully constructed financial plans.

"Increasing the size of your household can come with direct as well as indirect financial consequences," Kilgore says. "Even in the best of circumstances, the additional costs can upset retirement plans if parents are not careful."

The solution is often simple: establish who pays for what before your child moves in, and never stop communicating. Make an agreement, written or verbal, covering rent or cost-sharing, utility contributions, grocery expenses, and household responsibilities. And set firm expectations around employment. Even if your child hasn't landed their dream job, they need income. "Young adults can take jobs as cashiers, wait staff, nannies, etc., to bring in money," Kilgore says. "The bottom line is that moving back home doesn't come scot-free."

If you're in a position to do so, consider banking the rent payments your child makes and surprising them with a lump sum when they move out—perhaps for furniture or a down payment. Just keep this plan to yourself until move-out day, or you'll eliminate their incentive to pay.

The big-picture financial considerations

Beyond monthly expenses, having an adult child move home raises structural questions about your property and legal obligations.

First, the deed question: Should you add your adult child to your home's title? The short answer is no. Adding someone to your deed creates potential complications with property taxes, Medicaid eligibility if you need long-term care down the road, and capital gains taxes when the property is eventually sold. Unless there's a compelling estate planning reason to do otherwise, keep your home's ownership structure as is.

If you're renting rather than owning, the rules differ. 

"If the parents don't own the house but are renting, then yes, the child needs to be put on the lease as an occupant or else it will likely violate the terms of the lease," says Evan Farr, a certified elder law attorney in Virginia.

The rent-versus-home-sharing-agreement distinction matters significantly for homeowners. If you charge your adult child rent and create a formal lease, that income is taxable. Farr recommends a different approach: "Rather than doing a lease agreement, the parents and the child should enter into a 'home sharing agreement' if the child is going to help pay for certain expenses. This way the parents can legitimately characterize the payments as nonincome and won't have to pay taxes on rental income."

You'll also want to check with your homeowners insurance company before the move-in. Some policies require notification when a nondependent adult moves in, particularly if that person will have their own vehicle parked at the property.

How this affects inheritance planning

For most families, an adult child temporarily living at home shouldn't fundamentally alter estate plans. But there are scenarios where it makes sense to revisit how you're dividing your assets.

The most common situation involves caregiving. If your adult child moves home specifically to care for you as you age—managing your medications, handling household tasks, providing transportation to medical appointments—they're providing valuable services that might otherwise cost tens of thousands of dollars annually. In these cases, many parents choose to recognize that contribution in their estate plan.

"As a certified elder law attorney working with older adults, I see this every day," Farr says. "Parents often will leave their house to the child who is living in the house, because that child often winds up becoming the caregiver and sometimes giving up their own future well-being—not buying their own home, or selling their own home to move in with the parents, not getting married, not having children—for the sake of caring for their parents."

But inheritance decisions involving real estate get complicated when you have multiple children. If you're considering leaving your home to the child who lives there, think carefully about how your other children will take that decision. Is the arrangement truly about caregiving and sacrifice, or is one child simply getting a sweetheart deal to live rent-free? Open communication with all your children about your estate planning reasoning can prevent bitter disputes after you're gone.

If you do decide to adjust your estate plan, work with an attorney to document the reasoning and ensure the arrangement is structured properly for tax and legal purposes.

Making it work for everyone

Multigenerational living is common in many cultures around the world, and rising housing costs have made it increasingly practical in the U.S. "Times have definitely changed and trying to buy a home is much more difficult for younger people," notes Kristen Conti, a Florida broker who has watched family members navigate this exact situation.

But if your adult child simply wants to avoid adult responsibilities or shows no commitment to working toward independence? That's a different story. "If the kids are doing it because they just don't want to work hard or take responsibility for their own lives, then getting them out into the real world as soon as possible would be in everyone's best interest," Conti says.

The arrangement works best when your adult child has concrete goals and a firm timeline. If they're saving aggressively for a down payment or paying down student loans while contributing to household expenses, everyone benefits. Set a target move-out date before they even unpack their boxes, and stick to it. "Without a firm date, it's all too easy for financial dependence to continue," Kilgore warns.

The bottom line: Welcoming an adult child home can work financially, but only with crystal-clear expectations, honest communication about costs and contributions, and a shared understanding that this is a steppingstone, not a permanent solution that compromises your own financial security.