529 Qualified Expenses Qeustion

Forum|Forum|1 year ago
June 6, 2024
2 replies
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I purchased a condominium for my dependent college student to live in while registered as a full-time student 800 miles from home. I realize that I can't use 529 funds to pay the mortgage on this property. Can I use 529 funds to pay utilities (electric, water, sewer, etc.) at the condominium while he lives there? Can I use 529 funds to pay condominium monthly HOA fees while he lives there?

Bsch4477

You must use whatever values your school publishes in their cost of attendance (COA) documents as your maximum.

Question_Everything

Do you mind posting a link to an IRS publication that supports the statement made in this post? Thank you

Hal_Al

Off campus room and board [housing & food] are eligible expenses for a 529 plan distribution. You CAN count mortgage interest (but not principle payments), as well as insurance, real estate tax, utilities and HOA fees.

But, the amount you can claim is limited to the lesser of what you actually pay or the school's "allowance for cost of attendance" (usually, what on campus students pay for housing ["room"] ).

Question_Everything

Do you mind posting a link to an IRS publication that supports the statements made in this post? Thank you

PaulaM

Listed here, the law states that mortgage payments are not qualified education expenses. The parent borrows the funds (and incurs interest expenses), not the beneficiary student. Therefore, it is not a qualified education expense.

Loan payments and their associated costs such as interest are not housing expenses.

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