Cypress, TX · Member since 2013 · 2 posts · 0 votes
Is anyone familiar with the terms of an FOM that allows parents to purchase a college residence for ther student child as a 2nd home...ie not an investment loan? Can that child/student have roommates that pay rent for their portion of the property as long as the child/student lives there for at least the 1st year?
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
13y
Yes, it needs to be moved to the finance section.
The FOM basically allows financing of a home for college bound children or parents as a second home without meeting the 50 mile away distance requirement. The home can be close to your primary home or any distance. The second home route allows tax benefits for interest deductions without treating the property as an investment.
You can charge rents, doing so may cause different tax treatments depending on charging market rates or nominal rents, but not the mortgage. Such issues may apply for estate tax treatments depending on how the title is made as you can have a co-borrower who would not otherwise qualify. So, see your tax advisor. :)