Locate A Tax Shelter Near A School
Published Wednesday, December 31, 1969 at: 2:00 PM EST
Will your child be packing up soon to go to college? If he or she doesn't have a place to live on campus, you might take advantage of a unique tax-saving opportunity.
If you can afford the cost, you could acquire an apartment building near the school and let your child live in one unit while you rent out the others. If it's a sound investment, you'll make money in the long run, especially if you eventually sell the building at a profit. What's more, your current income from tenants may be subject to favorable tax rules—as could a future sale of the property.
Rental income is taxable, but it may be offset by deductions for expenses such as mortgage interest, property taxes, maintenance, insurance, and other costs, and you also can take a generous depreciation allowance. In some cases, you even may be able to deduct a loss from the rental activity, although this is complicated by "passive activity loss" (PAL) rules.
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