I am planning to buy a condo for my college kid to live in next year. Originally, I was going to have just me on the deed and have them pay "rent" to me using 529 withdrawals to cover the monthly expenses (utilities, HOA fees, insurance, and property tax). Due to the HOA rules, she may need to be on the deed, and it occurred to me that this could work out better, because she can claim homestead exemption for property tax, and I won't have to pay rental income tax. Then, she would just pay the expenses directly using 529 withdrawals, and I don't have to be in the loop at all. HOWEVER, it's not clear if all these expenses if paid directly are qualified 529 expenses. Utilities definitely are, but I' not so sure about HOA fees, homeowner's insurance and property tax. The total cost will be way less than the estimated living expenses published by the school.
How is this supposed to work for a student who owns their own home and wants to use 529 funds to cover living expenses (I know you can't use 529 funds to pay a mortgage; there won't be a mortgage on this home). Anyone have any experience with this?
Submitted February 21, 2021 at 06:57PM by 19calypso72 https://ift.tt/3siar3I
