Buying student housing for your child

If your child is going to university or college, consider buying a home or condo that they can live in, and perhaps shareShare A piece of ownership in a company. A share does not give you direct control over the company’s daily operations. But it does let you get a share of profits if the company pays dividends.+ read full definition with a fellow student who pays you rent. It can be a good alternative to paying thousands of dollars toward residence fees or rent. And it’s a real estate investment for you with at least one guaranteed tenant — your child.

4 things to consider

  1. The rental income can pay many of your costs. Just remember to declare it on your tax return.
  2. As a landlord, you can claim many of your expenses, including mortgage interest. Assess your costs carefully before you buy. They will vary with the local real estate market, mortgage rates and other factors.
  3. Plan for some vacancies. Your child (or their roommate) may not stay in the place over the summer break.
  4. You’ll increase your equityEquity Two meanings: 1. The part of investment you have paid for in cash. Example: you may have equity in a home or a business. 2. Investments in the stock market. Example: equity mutual funds.+ read full definition in the property as you pay off any mortgageMortgage A loan that you get to pay for a home or other property. Often the loan is for 20 years or more. You make a set number of payments for a set amount each year.+ read full definition. And the value of the property may rise over time. This can offset your costs. But whether you do more than break even depends on what happens to housing prices in the area.

Learn more about buying a property that is not your main home.

Remember that mortgage rates and other costs change. These changes will affect the numbers and your decision.

Take action

Claim your expenses as a landlord, including mortgage interest, when you file your income taxIncome tax A charge you pay based on your total income from all sources. The Canadian government and your province set the rate.+ read full definition return.

 

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