College Purchase vs Rental
Compare Investing vs Renting
a condo to align with your, and/or your child’s time in Boston. Grow Or Sell your Investment Property.
Property ownership can provide major tax benefits & a source of equity, in addition to consistency and peace of mind through the entirety of your academic career.
For Example
We recommend purchasing a condo in both your name and your child’s name, for additional investment benefits. Boston/ The State of Massachusetts allows an owner-occupant (you or your child) to qualify for a real estate tax abatement for each year of owner-occupancy. Their name must be on the deed.
As of 2024, the residential exemption was raised up to $3,610.53. This means if the real estate taxes are $4,900/year, applying the exemption reduces the annual property tax to $1,289.47, a significant savings. (For more details, visit Boston Residential Exemption).
Having a roommate allows you to further depreciate the rent from the property.
Scenario A
You purchase a property for $500,000, with the land valued at $125,000 and the building portion at $375,000.
The depreciation deduction would typically be calculated as $375,000 / 27.5 years = $13,636.36 every year.
- Income from a roommate can balance condo fees, taxes, insurance, and mortgage payments.
- Any losses from depreciation reduce your income taxes.
- Avoid recurring rental moving costs.
- Gain asset(s) to draw equity from.
- Consult with your CPA to understand the potential benefits of depreciation, tax deductions, and rental income.
