Avoid Paying Rent for Your College Student Child:
Instead of paying rent to someone else for up to 4 years (or more!) while your child attends a St. Louis area college or university, you should consider purchasing a property where your child can live instead. Your child can invite a few friends to move in and help pay the mortgage, keeping your costs even lower. When your child finishes school, you can keep the property as a rental investment or you can sell it.
Given the low housing prices due to the economic downturn and St. Louis housing buyer’s market, good deals can be found in walking distance of just about every St. Louis university. Plus, the first time buyer housing credit makes a college housing purchase an even smarter choice.
Housing Tax Credit for College Students:
The current first time buyer housing credit can still be obtained when unmarried co-buyers purchase a primary residence together. If both buyers are first time buyers, then the $8,000 tax credit would be split between the buyers. However, if only one of the buyers is a first time buyer, the full $8,000 tax credit can be credited to the first time buyer.
*** NOTE: The tax credit is equal to 10% of the purchase price, up to a maximum credit of $8,000. So, in order to obtain the full $8,000 tax credit, a purchased property would need to cost $80,000 or more. Properties need to be under contract by April 30, 2010 and close by June 30, 2010.
How does this apply to college students?
If a college student and their parent bought a home together and the college student is over the age of 18 and not a dependent, the student should be eligible for the full tax credit. There are some restrictions, including how long you need to own the property before you can sell, so you should consult your tax professional to make sure that you qualify before you make a purchase.
The tax credit applies to any type of property as long as it is used as a primary residence. You could purchase a home for your college student to share with friends, or you could purchase a condo or townhouse to avoid exterior maintenance and yard responsibilities.
Honestly, even if you wouldn’t be be eligible for the tax credit, it may still be a smart choice to purchase a property to be used for college housing rather than paying rent.
Properties for Sale near St. Louis Colleges & Universities:
Contact us and we can set up a search to meet all of your criteria near any of the local colleges.
10936 Manchester Road St. Louis, MO, 63122 USA
admin@archcityhomes.com • 314-677-6538
Possibly Related Posts:
- Who is Eligible for the New Housing Tax Credit?
- Housing Tax Credit for 1st Time Buyers & Current Homeowners
- Missouri Residents can use the First Time Buyer Tax Credit at Closing to Cover Costs
- Housing Market Opportunity – $7,500 Tax Credit for Renters
{ 2 comments… read them below or add one }
Parents have to remember that purchasing a house in their name and the student’s name will count as an investment property for them for the purpose of the FAFSA. Mortgages are not factored into assets, so the full value of the home will be considered an investment asset for FAFSA purposes. Meanwhile, for the College Board CSS/PROFILE application (used a lot by private schools), looks at home equity for both the parents’ and student’s primary residence, with the individual schools deciding how to apply the value and/or equity of the homes. In particular, mortgage payments for recent home purchases are not deducted from available income so as to penalize the practice of purchasing a home to reduce liquid assets; mortgage payments on longer held assets are considered protected and deducted from household income.
Brett,
Thanks for providing some important information on how purchasing a home for the student to live in instead of having them rent can impact financial aid awards. It is definitely something that parents should consider and factor in before they decide if purchasing housing for their college age child makes sense.