02 Aug A Smarter College Housing Option
Posted at 14:20h in Uncategorized
Does your child, grandchild, or someone else you know need a place to live while attending college? Instead of renting a dorm or apartment, buying a condo or small house might make more sense. This can save money and provide tax breaks, but you need to do the math and be aware of the risks.
The benefits of buying
- Lower monthly costs. The benefits can vary based on the location of the school and demand for off-campus housing. But purchasing a place can save on monthly rent and utilities. It can be especially attractive if the school’s meal plan is overpriced.
- More tax breaks. Home owners can write off mortgage interest and property taxes, subject to certain limits. And by renting out your home to other students, you may depreciate the property and deduct other expenses as part of the rental activity.
- Create income potential. Speaking of renting out the home, this can turn an expense (dorm cost) into a steady source of income on a monthly basis.
- Cash in on market appreciation. Although there are no guarantees, the value of real estate generally goes up. So, the condo or house you buy while your student is attending school may be worth a lot more when it is time to sell.
- Lower tuition costs. Your home or condo purchase may allow your student to establish residency in the college’s state. This residency status can lead to a lower tuition rate. Residency laws vary by location and can be very specific, so thorough research is required.
Risks to consider
Of course, buying real estate also comes with inherent risks.
- The home could decrease in value.
- Landlords are subject to limits and special passive activity rules.
- Expenses like upkeep and closing costs on the sale must be handled.
- Dealing with college students as tenants can be a hassle.
Look before you leap into a deal to see if it makes sense for your family. Call today for assistance.