It does not sound like there will be any deductions for your son, living there as a primary resident. All the deductions he could take are itemized deductions that can only lower his taxable income. With little or no income, not enough would be taxable to make any difference in his tax refund or amount owed.
For you, calling the property a second home would not mess up your existing home itemized deductions. The total you can deduct for interest and state tax (including property tax) will be limited next year. Whether you are already paying more than the new limits or would be if you added in the second home property tax or interest, the total will still be limited to the same amount.
If you claim the house as an investment property, if your tenant does not pay the going going market rate for rent, you can only deduct expenses up to the rental income. With no rental income, the house would automatically be considered as a second residence for you and his living there would be the same as personal use by you. If you could bring the rent you receive up to the total going market rate by leasing additional rooms to other students, then you could claim mortgage interest and property tax against the rental income. You could also claim depreciation. If the property shows a loss on your return, though, no part of the loss is deductible if your income exceeds $150,000. If you show a gain, you would be paying additional tax on that gain.
It really sounds like the only useful result (taxwise) of buying the home would be if your current mortgage interest and property tax don't meet or exceed the new limits on the deductible portion, then claiming the house as a second home could let you increase those deductions up to the new limit.
The new deduction for mortgage interest will be limited to interest on the first $750,000 in mortgage amount, and the deduction for all state and local taxes, including property tax, will be $10,000.
