How is Real Estate treated when considering Child's Eligibility for Financial Aid?

By
Real Estate Agent with Century 21 (SUNNYVALE, CA) - (408) 893-2410

How is Real Estate treated when considering Child's Eligibility for Financial Aid?

 

 

 

If you have a child entering or in college, then this is an important question.

From the FinAid SmartStudent Guide(TM)to Financial Aid "Real estate is normally treated as an investment asset, not a business asset, unless it is part of a formally recognized business that provides services beyond utilities and trash collection, such as maid service. However, incorporating a business and transferring the real estate to the business bypasses this restriction, since a corporation is a separate legal entity. When combined with the small business exclusion, this can cause real estate to change from being reported as an investment asset to being entirely excluded from assets."

Real estate is a good investment. It's better to make money than lose money. Obviously, it doesn't make sense to really lose money just for the sake of getting more financial aid. However, what you can legally do is consider the timing and the mix of you cash, assets, etc and whose name they are under. In general it's better if you the parent and/or the grandparent owns the assets rather than your child. Delay putting assets in your childs name until late in their junior year in college after you've filed your last application for financial aid.

Also, spend your cash, don't save it. Don't buy anything you wouldn't buy, but if it's something you eventually need to buy and/or pay, then do it during the student financial aid years. If your car is getting old, then buy it now rather than waiting until it's really old. If you have lots of cash, should you purposely spend it by buying investment property? Yes, if it's a good investment property. No, if it's not a good investment property. If you do buy investment property, then consider the strategy I mentioned earlier that can cause real estate to change from being reported as an investment asset to being entirely excluded from assets for financial aid purposes.

Disclaimer: This post is just to give you some ideas. I am a REALTOR not a lawyer. Please consult legal counsel for professional legal advice.

 

Posted by Robert Real Estate (408) 596-3188 at 10:35 AM

 

Posted by

Robert Lei

Real Estate Professional

Century 21 M&M and Associates

Sunnyvale, CA 94087

(408) 893-2410

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Rainer
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Sara Garden
Rocky Mountain Home Staging - Boulder, CO
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Very interesting and helpful post -thanks!

Nov 20, 2011 06:18 AM #1
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Rainer
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Robert Lei

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