Investments to Pay for Your Child's College Education

By: Cactus Country Property
 
PHOENIX - July 26, 2013 - PRLog -- Paying for your child’s college education can be expensive but with an investment in real estate and the opening of savings accounts, it can become quite affordable. One would also suggest sending your child to an accredited online university to save in housing and transportation education costs.
The cherry on top of your pile of child-related expenses, is more than likely going to be the cost of their college education. The price of a college degree can be a crippling obligation to parents that want to shoulder the cost. If the idea of covering your child’s college expenses seems like an overwhelming task, there are still ways to accumulate enough money to pay for most, if not all, of these expenses. Saving money is an important step to get you started, but this may not be enough on its own. You need to give this money the chance to grow with investments, or educational savings accounts, to help offset taxes and get the money to snowball into a sizeable amount.  
Real Estate
One investment strategy that can be used to pay for college tuition involves buying a rental property. Using some of the savings that you have already accumulated can be used for the down payment on a condo or home that can be rented out to pay for itself.  
You can start by finding a property that is slightly below market value that should be easy to rent out. You want to purchase a home that will appeal to a wide range of people for both renting and selling purposes. For the next few years you can rent out the home and keep up on the maintenance until your child is ready to attend college. At this point you will have a few different options. You can sell the property and use the profit for tuition funding, or you can refinance and use the earnings to put toward the cost of college while you retain ownership of the property. You also have the choice of using the rental property for your child’s housing during their college years, while you pay them to act as the property manager, which will work as a tax deduction for you.
Coverdell Educational Savings Account
If you make less than $110,000 annually or $220,000 if you are filing jointly with your spouse, you are allowed to put $2000 every year into a Coverdell Education Savings Account (ESA) for every child that is under 18 years of age. Although contributions are not tax deductible, the earnings on your contributions will be tax-free as long as they are used for to pay for education expenses and will be taxed as income at the beneficiary’s tax rate. One negative to this type of savings account is that the funds will be factored into your child’s eligibility for financial aid. While you are contributing money into an ESA you can also place additional funds into a 529 plan, which is explained in the following section.
529 Plans
These plans are similar to an ESA because they allow your contributions to accumulate without being taxed. Also, if you use the gains for qualified education expenses, withdrawals will be tax-free as well. The main difference between and ESA and a 529 plan is the limit on contributions. While an ESA has a limit of $2,000 a year and requires that the parent’s income must be below a certain level, a 529 has no limitations based on income and has a higher contribution allowance. Since 529 plans are sponsored by individual states, you may be able to deduct some or all of your contribution from your state tax returns.

College Education
Paying for your child’s college education can be expensive but with an investment in real estate and the opening of savings accounts, it can become quite affordable. One would also suggest sending your child to an accredited online university to save in housing and transportation education costs.
Maureen Karpinski
Find your Phoenix Arizona Property at http://www.cactuscountryproperty.com/city/phoenix.htm
Posted by Cactus Country Arizona Homes & Properties http://www.cactuscountryproperty.com
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