A growing trend is for parents to buy a condo for their college-age children to live in, instead of a dormitory. This gives the child more luxurious accommodations (and encourages an environment conducive to studying instead of all-night partying), while creating the possibility that the parents can sell the property at a profit in four years.

There are other financial benefits, too. For instance, suppose that instead of paying the college for room and board, you give the money to your child. You can give your child up to $14,000 a year without paying gift tax, and a married couple can give up to $28,000. Your child can then use the money to pay you rent for the condo. Voilà! You’ve created a rental business that provides tax breaks.

As long as you’re charging your child full market rent, you can deduct your mortgage interest payments as a business expense. You can also deduct other operating expenses, such as insurance, utilities, condo fees, cleaning costs, maintenance and repairs. You may also be able to take a deduction for depreciation.

To persuade the IRS that you’re actually operating a business, it’s a good idea to set up a separate checking account for all condo-related transactions, and have your child send you a monthly check marked “rent.” (Keep in mind that if your child has a roommate in the condo, the roommate can also pay you “rent.”)

There can occasionally be some complex tax issues involved in this arrangement, and you’ll want to consult a tax advisor before taking the plunge.

What if you don’t want to charge market rent to your child? You can still buy a condo, declare it as your second home, and deduct the property taxes and mortgage interest in most cases – and keep any profit when you sell.