Here's the basic scenario:

Engineering Graduate...living at home...good job (1 year)...good credit...paying my parents "rent"... which I think they are putting in a regular savings account for me...then they plan to give it back to me to help me with the DownPayment once I decide to buy a house.

(Wonderful idea & I appreciate it tremendously !!!)

I think there may be better options to improve this set-up. Hopefully, the experts here can offer a few different ideas on what to do with these dollars; instead of simply Mom & Dads savings account.

Are there savings advantages for 'first time homebuyers' avilable? Special accounts? Put it into my 401K? Their 401K? Deposit to an IRA & withdraw later?

How can I maximize this situation accumulation-wise or tax-wise?

What would you rec'mnd for your own kid ???

Thank you very much !!!

Have a great day, everyone !!!

(are there good websites that I should be reading about this ???)

There are several programs out there for 1st time home buyers. I think Wachovia Bank has a $14K "grant" that you can use. The "give" you $14K to put down on a home, you don't make payments on the loan... but you have to give it back within a certain time frame - or when you sell. Get in touch with a good mortgage broker!

What is Your Goal? Are you wanting to purchase a property to live in and get out of Mom & Dad's house? or Are you wanting to start investing and accumulating assets with good tax benefits?

These are TOTALLY different goals that can not usually be accomplished with the same game plan.

"The" American dream is to own your own property. Nothing wrong with that, it's a good thing. BUT, it is generally not considered an investment or one of the better ways to start accumulating assets... it will in-fact retard your potential for asset accumulation and is a poor tax vehicle as compared to true investments and since you appear to have few debts, you would most likely not receive much real tax benifits... the short form will probably result in higher returns than if you filed the long term... sad news but true in most cases of individual tax payers with few deductions.

Now that you have your engineering degree, cross the hall/ walk way and take a few economics/ finance classes. Get a better understanding of investments and the massive number of deductions they have the ability to generate. An MBA has never harmed an Engineer... IR12

If you want to get out of the house...buy something and move in... but it is not truly a great investment approach to accumulate assets and improve your tax position.

If you're in an area with appreciating home prices (or better yet, decreasing home prices) you might be better off to get a 0 down loan right not and start building up equity in a house as well as taking advantage of appreciating values.

A house that you could buy for $200,000 today could well cost you $250,000 or more in 5 years depending on your area and home values.