Use a 529 plan to escape taxes of investment property sale

Question

So I have been attempting to devise a way to go back to school in a cost effective manner. I enjoy what I do but I really want to continue learning. Unfortunately, like many on here I am cheap money conscious.

One of my rentals is at a point where I am comfortable selling it and I believe that I can profit somewhere between $75k-$100k on it. Now, I don't want to hand any of it over to the tax man but rolling it into another building at this point isn't in my scope either. I would just rather keep it than go through that trouble.

What I would like to do is put all of or most of this money into a 529 plan and use it to go back and get my masters and doctorate. I've been searching the web though and I'm having trouble finding information about doing this.

So here are my questions:

1. First, can I even roll any my profits into a 529 plan to avoid taxes.
2. Is there any special requirements for the state of Ohio.
3. Is there a better solution that I am overlooking.

Answer 1

First, can I even roll any my profits into a 529 plan to avoid taxes.

No. 529 plans are not pre-tax (except for State taxes in certain States, where 529 contributions are deductible. Ohio is such a State, with certain conditions). For Federal taxes - funding a 529 with yourself as a beneficiary doesn't change a thing on your taxes.

Is there any special requirements for the state of Ohio.

Yes, see the link above. Essentially you'll be carrying the deduction forward for years until you exhaust it, $2000 at a time.

Is there a better solution that I am overlooking.

No. If it was easy to avoid income taxes - everyone would be doing it.