Buying a property for child while in college and tax implications

Your realtor should be able to advise you whether a contingent on inspection offer will have a chance or not. Where I live, that kind of an offer will be at the bottom of the pile. People pre-inspect. Good luck!

Actually I’ am able to get in the property. I’m not holding my breath as this is a multiple offer situation. At any rate, of course the formal offer would be contingent upon a formal inspection. This isn’t the first home I’ve purchased.

If the buyer doesn’t want it, then oh well, my world won’t end. This area is in transition and folks are starting to notice.I’m probably going to be outbid by an all cash investor. :frowning:

Good luck! Hope the situation is not as crazy as it is here. In our crazy market, financing contingency is not a kiss of death, but inspection contingencies are. Most serious buyers do a pre-inspection and then either walk away without making an offer or make an offer waiving inspection.

Did you make an offer?

@BunsenBurner So I saw the property and I passed. It needed new carpet, paint in the entire place and the floor was warped which Tells me there was a leak at one point. They were pretty much expecting asking and at that price I needed it to be in a better condition. The monthly fees were high as well and they didn’t include much.

Another unit went on the market this week in the same complex and it was snapped up by an investor.

So it looks like I’m going to have to pay cash if I want to compete. I definitely did not want to go that route but it doesn’t look like I have a choice. I can’t fathom paying her school over 14k for room and board for another year and the decent apartments are darn near just as much by the time I send grocery money. My agent is FaceTiming me today with another property. So I’m crossing my fingers.

@partyof5, we did this. ShawD transferred after the first semester of freshman year to a five year program and lived in the dorm for a semester. She hated the dorms, which were also very expensive. Bad foods (she’s a very health eater), kids not mature, … . She wanted to rent a room in an apartment or an apartment but lots of people assumed that sophomores were heavy parties, not mature, not responsible etc. She was a nursing student working very hard with part-time jobs in addition to classes. So, we decided to buy a condo (owned by an LLC that is owned by a beneficiary defective trust so for tax purposes it is owned by me but for asset protection purposes by an LLC and not me). It is a two-bedroom unit with one very large BR and she rented that out to two other nursing students. We paid the trust market rent for her part. I think I took out a loan personally before transferring ownership. I did not pretend it was a first or second house. Haven’t had a problem with the bank (the trust pays the loan each month) or from the IRS (the interest would have shown up on my taxes anyway because the trust is beneficiary defective). We did get a property tax break for the years my daughter was there, because the owner was a trust and she was a beneficiary of the trust.

The apartment is in a desirable neighborhood that is walking distance of three major teaching hospitals and a major medical school (a longish walk). So, we thought it would be smart to keep it. ShawD graduated, moved away and we have been renting it out to people working in the medical field. If we move out of the area, we would probably sell. But its appreciation in value over the years ShawD was living there probably paid for her tuition.

Interestingly, ShawD is moving back to the area and she will rent from us another condo that we bought 30 years ago in a dilapidated area that has now become fashionable. We used it for a couple of years and then began renting it. We were doing its first renovation since we bought it, before knowing that ShawD might want to rent it. We expect that her BF will move in when his lease expires. This one we own directly (not through a trust or LLC, though we may transfer to an LLC). I don’t see any particular tax ramifications as long as we do everything on an arms-length basis and charge market rents, but I will now ask my tax guy.

Update: I found a condo and a verbal offer has been made as the condo isn’t listed yet. My only concern are the condo’s bylaws. I’m not sure I will be allowed to rent it out.

I have not read all of the posts, so forgive me if I am repeating something that has already been explained. In the first few posts I did read, there is a lot of misinformation.

I learned a lot about this last year when I purchased a home for my parents.

Fannie Mae has a provision whereby, per IRS regulations, you can buy a home for your college student or your low income parents with primary home underwriting. You aren’t expected to collect or report any rental income on that home.You don’t have to live in the home for 14 days as you would with a second home.

We weren’t renting the house out, so I assume, that since it would be considered a primary home for all intents and purposes, that if you rent half the home you would have to report that rental income, but you would also be able to deduct half the expenses.

What a wonderful thing to do.

^Drop in the bucket compared to what a pain in the @$! it must have been raising me (though I never did anything wrong outside the house).

Also…it sounds better than it really is…the home is in the midwest…awesome home, dirt cheap…a LOT less money every year than the tuition and room and board we recently finished paying. :wink:

Update I am tentatively scheduled to close next Friday, yea!!!

Update:

I closed on the condo, it was in excellent condition. I had to buy as-is but it only needed a good cleaning. It was freshly painted with new carpet. I am very pleased with the purchase.

Congratulations!