Consider purchasing a condominium as an investment that runs parallel to your child’s stay in Boston (the condominium could even continue as a rental property, if desired).
Purchasing a condominium for your son/daughter to live in can make excellent financial sense and it’s a place that your child can call “home” while in Boston.
Owning the property where your child lives for their college years gives your child consistency, stability, and security for the time they live in Boston.
Purchasing a condominium in both your name and your child’s name creates an even more favorable investment. In the City of Boston, an owner-occupant (which your child would be since their name would also be on the deed) gets a real estate tax abatement for each year that they owner-occupy. In 2023, the residential exemption is $3,456.60. So, if the real estate taxes are $6,000/year, by applying the residential exemption, your real estate tax would only be $2,543.40. That becomes a significant savings. (www.boston.gov/departments/assessing/residential-exemption). If you purchase a property and your child has a roommate that pays rent to you, you should be able to depreciate the property. Example… Purchase a property for $1,000,000. The land portion is valued at $250,000 and the building portion of the property is valued at $750,000. Depreciation is typically calculated as $750,000 / 27.5 years = $27,272.72 as a yearly deduction. The income from a roommate(s) offsets expenses such as monthly condominium fees, real estate taxes, insurance, and mortgage payments. Any yearly loss offsets/reduces your personal income taxes. Ask your CPA how you could benefit from the depreciation, write-offs, and potential income. But most importantly, your child has a home while in Boston that is also a financial vehicle for future appreciation.
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