Could Buying a Rental Home Really Help Pay for College?
It’s back to school and for many that means school supplies and new clothes, but what about kids who are heading off to college? Their expenses are much greater than a few new outfits, pencils, paper and glue sticks. Besides the cost of tuition, most college students have to deal with the added expenses of room and board. Add it all up and college is definitely expensive. But what if there were a way to make your room and board expenses work for you, in the form of a nice tax break?
It is possible and it could actually be a great way to save. Here’s how it works. You buy a rental property for your own child to live in and have him/her find a few roommates. There are several advantages to this arrangement if you do it right. First, you get to keep the normal tax deductions that you would from owning a rental property. You can also hire your child to be the property manager and then use the net income you pay your child towards his/her tuition, with either very little, or no tax at all. Meanwhile, the monthly rent payments from the roommates can go towards the mortgage payment.
After graduation, you have two options. You can hold onto the property and continue renting it until it’s paid off and then use it as a retirement property. You could also use it for a 1031 exchange, which would allow you to defer the tax on your capital gain if you buy another “like-kind” property. So, if you have the ability to invest in a rental property you could save yourself thousands in college expenses and taxes.
More Work for Accountants! President Obama’s Corporate Tax Proposal
More Work for Accountants! President Obama’s Corporate Tax Proposal By Ron Cohen, CPA, MST Partner Greenstein, Rogoff, Olsen & Co., LLP In the White House summary of corporate tax proposals: http://media.npr.org/documents/2009/may/whitehouse_taxhavens.pdf At “Backgrounder” Article I. Sec. 1, it states: “Current Law Companies Can Defer Paying Taxes on Overseas Profits Until Later, While Taking Tax Deductions…
Deducting “Other” Business Expenses
Deducting “Other” Business Expenses The mysterious “other.” Some tax deductions are not mentioned by name on a tax form but can still be quite valuable to a taxpayer. If you own a trade or business, you can deduct a number of expenses under the broad category of “other.” In general, taxpayers may deduct ordinary and…
Commonly Overlooked Tax Deductions
Commonly Overlooked Tax Deductions As the tax filing deadline approaches, taxpayers are always looking for legitimate tax deductions they may have overlooked. For example, did you know you can deduct the money your business spent to purchase office supplies during the year? As long as these expenses were for items that are ordinary and necessary…
Tax Benefits of Owning a Home
Tax Benefits of Owning a Home Deducting mortgage interest In most cases, you can fully deduct your mortgage interest secured by your primary or secondary home. Beginning in 1987, mortgage interest to buy, build, or improve your home (acquisition debt) up to $1,000,000 or home equity loans up to $100,000 became tax deductible. Points (also known…