Using a 529 plan disbursement to pay for a rental

[Chris T.]

Let me first start off by saying my oldest child is 3.5 years old so I know things will change many times before she sets off to college.

That said, after reading an article about the uses of a 529 plan, it mentions that it can also be used to pay for off campus housing, up to the cost of on campus housing reported by the schools financial office. If I were to purchase a rental property that my daughter would live in, could I "charge" rent and pay myself (or LLC) with tax free money from the 529 plan?

If so, it would be a way to insure that I am not over contributing to a 529 plan if she is able to get a scholarship and also a way to reimburse myself for the rental property using tax free money.  

Anyone have any insight on this?

[David Morgan]

@Edward Rhoads @Andrew S.

Self-directed Coverdell ESAs do exist and you can put the same kinds of investments in them as you can put in a self-directed IRA. Here's an article about it: BiggerPockets Coverdell Blog Post