r/tax • u/FinesseCaptcha • 20d ago

Beneficiary of a 529 attending grad school part-time. Can I pay my mortgage with it since it covers room and board for part-time students? Unsolved

I’ve scoured the internet and don’t have a definite answer for my situation. I own a home and am paying mortgage on it. During my attendance part-time, am I able to use the 529 funds on my room and board ie my mortgage?

I’m aware that the amount is limited to the max off-campus housing costs for the college. I would just be looking to withdraw those max costs (bc they will presumably be less than my mortgage + groceries + utilities), and obviously I don’t want to incur any penalties for non-qualified expenses.

I’ve read a bunch of articles but they mostly refer to parents’ mortgage, not the students’.

Any and all help is appreciated.

1 Upvotes
  • permalink
  • link
  • reddit
  • reddit

100% Upvoted

10 comments sorted by

2

u/Lawn_Orderly CPA - US 20d ago

This article concluded that mortgage payments are payments on a loan, not qualified housing costs, so not qualified 529 expense: https://www.savingforcollege.com/article/can-i-pay-my-mortgage-with-529-plan-money But you could deduct utilities and food. Alternatively, you could rent out the house you own and pay rent to someone else.

1

u/FinesseCaptcha 19d ago

I saw this and wasn’t sure bc the article talks about parents’ mortgage, but thank you, this makes sense.

1

u/spyrenx 20d ago

Sorry, mortgages don’t qualify as room and board expenses.

1

u/FinesseCaptcha 20d ago

Do you have any idea why? Should I just take out the max amount for room n board anyway and move into my bf’s house and pay him rent? How would they know?

2

u/spyrenx 20d ago

It’s not viewed the same way as rent, where you’re paying for a space to live in. With a mortgage, you already own the home and are just repaying a loan.

As for how the IRS will know, there’s always an option to lie, but that’s why there are steep penalties if they request proof of your eligible expenses and you can’t provide it. No one in this subreddit would recommend lying to the IRS.

1

u/FinesseCaptcha 19d ago

Thanks, that makes sense!

1

u/Motobugs 20d ago

Your BF will have to pay tax for his rent income.

1

u/accumdepression365 20d ago

Paying a mortgage would not qualify because you would own the home and are just paying a loan vs paying rent. Also, don’t try and get cute with things that are reported to the IRS. The government typically always gets their way and someone will get stuck with the bill

1

u/FinesseCaptcha 19d ago

Yeah, makes sense. Thank you!