If the real estate market in your child's college town looks attractive, consider buying a condo or small house in the area. You can rent it to your child. Hopefully, the rental property will:

• Go up in value
• Produce tax writeoffs that you can deduct

You gain another advantage with the rental. Unlike most parents, you have a place to stay when you visit. Just be sure to charge your child a fair rental price, or the property will be considered used for personal purposes — meaning no deductions beyond interest and taxes.

Later, you can sell the property for what you hope will be a healthy profit. If you sell at a profit, the government taxes you at:

• 25 percent for the gain attributable to depreciation after May 6, 1997
• 20 percent on the gain attributable to appreciation of the property

• With a Section 1031 exchange for another rental property
• By having a bad year in the year of sale so that you pay capital gains at the 10-percent rate