Smart Money: Buy A Rental Property To Pay For College – Save On Taxes And Tuition With No Room And Board
With the cost of the priciest colleges now over $65,000 a year, and room and board costs increasing faster than tuition at many colleges, buying a rental property for your child and a couple of good roommates to live in can be a savvy college funding, tax and retirement move.
You can pick up all of the traditional tax deductions from owning a rental property, hire your child to manage the place and use his net income to pay for tuition with little or no tax, while the rent the roommates pay can help pay the mortgage. When your child graduates in four years, and he will, right? Then you can either hang onto the rental and use it as a home once its paid off, or you can do a 1031 exchange, deferring the tax on the capital gain so long as you buy another “like-kind” property, possibly in a location you prefer to retire to.
Who’s The landlord?
The young college person has to be responsible enough to screen potential tenants or roommates, do a credit check if need be, sign agreements, collect the rent and not let the place fall apart. “Parents cannot be absentee landlords. If your child is not the manager type that’s fine.” You just need to know that going into arrangement to avoid stress for your studying student and yourself. Know who the landlord is and what the responsibilities are. Contact NestQuest Direct today to find you the perfect investment property.
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By Troy Onink for Forbes
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