Great news! My daughter was accepted at Dartmouth. The FA department has been sending her emails and recently sent this one. I will clarify so it makes a bit more sense. We have 20 acres of Exclusive Farm Use land in Central Oregon. When we purchased the property in the early 1990s, there were two old mobile homes. They were grandfathered in by the county and over the years we’ve been able to replace them both. We live in one and rent the other. Hopefully that provides some background to the attached response:
Thank you for this information. Because half of your property is used for rental income, this part of the property is considered real estate and should be reported as such.
I will go ahead and make this update to the CSS Profile for you which will, unfortunately, increase the parent contribution. A revised award will be prepared for you, and you will be notified via email when it is ready to view in the applicant portal.
Additionally, we are still in need of the parent asset verification form for you. I have attached it for your convenience.
Please let me know if you have any additional questions. I am happy to help.
I do have a second part to this. The initial offer still leaves an outstanding balance (parental contribution) of 27,500 per year (before this email from the FA department arrived). The bottom line is that this is far beyond what we are capable of contributing (if we’re lucky we can scrape together $10,000 per year and that will be a stretch). Our current AGI is right around 27,500. Last year it was higher and I was still working, but it wasn’t that high (about 10K higher). I don’t really understand how they came up with that parental contribution and how we will be able to appeal it (now that we’re slated to get a new, increased parental contribution).
If you are renting part of that property, it is a rental income property and must be declared as an asset on your financial aid forms. In addition, the rent would be listed as income.
What is the value of that 1/2 of the property?
Have you checked to make sure your financial aid application forms are correctly completed?
I would try to talk to a financial aid advisor at Dartmouth…not the person who answers the phone but someone who can answer the question of how they computed your need based aid.
Oh yes, we’ve declared the income and do a Schedule E. But I’m not sure where Dartmouth came up with our renting 1/2 of the property. That doesn’t make any sense to me. The rental provides income, yes that it does. However, strangely enough, it contributes very little to the overall value of the property, and in some ways becomes a liability. What I mean by that is that because there are two homes, it has been virtually impossible to get a comp, to refinance and for a bank to do a (new) loan (it’s a very unusual property). The rental is a home with a typical yard area (well under 1/2 an acre). It’s an Adair build, built in 1997. A simple and plain home; nothing fancy at all.
Interestingly enough, when I went into Dartmouth’s calculator of estimated cost to parents/family, it came back with an estimate of about $4800, so I honestly have no idea how they have come up with $27,500 parental contribution. I sent the FA office an email and will probably followup with a phone call on Monday.
What did you put into the Net Price Calculator as the value of that property, and your rent?
It does seem odd that they’re splitting 20 acres into 10 acres primary residence and 10 acres rental property. That may need to be addressed. The rental property may only consist of the mobile home and 1/4 acre (the amount of property the renters are able to “use”.
What is the value of that 20 acres of land?
Another parent’s child wasn’t able to go to Yale because the school placed too high of a value of his ranch.
Years ago, so this might have changed, a mobile home was a vehicle in Oregon, forever and ever. No matter how permanent you made it by cutting off the tongue, building a foundation, popping the top, it remained forever a titled vehicle and never ever ever real estate.
If that is still the case, or if it is the case that you still hold the rental mobile home as a vehicle, then the real estate should not be valued as part of your rental. This would also be reflected on your depreciation schedules. The value of the mobile home is easy to establish (it’s just a big car) and the value doesn’t include your land.
I’d argue that the entire land value belongs to your home and none of it belongs to the rental or only a small fraction of the farm should be included in the value of the second home. You’d provide a copy of the registration and the title to the mobile home to show its value and that it isn’t real estate. You might also show that the land hasn’t been legally divided into two separate lots and in fact can’t be subdivided for homes because of a deed restriction. It would be similar to if you owned a mobile home in a mobile home park. You can rent it out, report the income, and neither you or the tenant have any claim to the land the MH is sitting on. If you have a lien on the MH and are paying off a loan on it, I’m sure the land in not part of the assessed value.
Now, as I said, Oregon law could have changed and mobile homes aren’t considered vehicles once they are ?? (affixed to the land, not registered/titled, etc.) This is entirely state law. Some states make mobile homes ‘real estate’ once they are permanent, others (like Oregon used to) never convert the title to real estate.
If Oregon does consider it real estate, you should still argue that it hasn’t been divided for the second/rental home. It would be no different than if you had a duplex and rented half, but the second apartment is not worth half the value of the 20 acres. The ‘main house’ has the value the the rental unit is just that, small rental income for the main house. You also might argue the both homes are on a small section of the 20 acre farm, so each doesn’t have half the value.
I used Zillow to get the estimated market value of the property (which I believe is incorrect due to a number of factors). Land/property values in Central Oregon are high (possibly artificially high). So Zillow estimates the value of the property/address at $800,000. I’m 99% certain we’d never get that much and that a prospective buyer would have a very difficult time getting financing (because of the two dwellings – we can’t get an appraisal and banks view it as risky…believe me, we’ve been there, done that when we tried to refinance a few years ago.
The rental is a stick built house. An Adair build (basic, entry-level), built in 1997. At that time, we managed to refinance the property (different era) and it cost $78,000 to build (which included a cap and fill septic system/drain field. I too would argue that the entire property is personal property. It is one tax lot. It is common where we live to have people have supplemental income on their hobby farmland, whether it be grazing, growing a crop, holding weddings, offering up riding lessons, Airbnbs, etc.
Oregon does not consider it real estate. It’s non-dividable land.
The rental (primary) is not a mobile home, it’s a stick built home. We have an old travel trailer that we’ve rented out seasonally on Airbnb, but we’re not doing that now.
Well…even a portion of $800,000 is going to add to your family contribution.
I think you need to show the school that this house only has 1/2 acre or whatever. However, this might be a challenge if you don’t have land records to support this.
How about your tax statements? How is the property taxed? If the entire 20 acres has one tax appraisal, I’d argue that there is just one property, the primary residence (and if the formula Dartmouth uses takes property equity into account, the entire 20 acres is taken into the calculation of the value. The second home is just another building on the property, much like a garage or barn would be. It can’t be sold separately or subdivided.
What was your gross income 2 years ago? That’s the year colleges will be using. They add a lot of deductions back in, so I think trying to calculate using your adjusted gross might be giving you an inaccurate estimate.
Weren’t you overseas 2 yrs ago? Renting out your primary residence? Your tax return would indicate the FEI exclusion? There is no way your numbers are straightforward. That discussion was quite long winded last year.
What admissions do you have that are financially viable?
Your situation is complicated. You own a significant valued property. Your income from 2017 was used on the 2019-2020 FAFSA. You retired since that time and have even less income.
You rented the property in 2017 so the rental incomes are reported as income.
Where were you living when you filed your 2019-2020 FAFSA…had you returned to Oregon or were you still in the UK.
Regardless, I think your best bet is to contact Dartmouth and speak to someone who can explain how they arrived at your family contribution. They might be correct.
It sounds like your issue is that you don’t have “typical” assets. On one of your other threads you mentioned offsetting your husband’s income with deductions. It doesn’t work like that. The IRS allows deductions. I wouldn’t count on colleges allowing very many.
The only way forward is to speak with a senior person in Dartmouth’s fin aid office. Since the land is not being used for farming income, they might be thinking you could sell acreage to pay college costs.
Meanwhile does your D have any affordable college options as of right now?
Also, are you renting out the farm land? Is it income producing property too?
I’d definitely look at the tax assessment and how the county views the property. It is often hard for the people working in college admissions to understanding how real estate is assessed in the western US as it is very different from the east coast. In Colorado, you can own half a county and if you don’t own the water rights, which are titled separately, your 500 acres might not be worth much.
Of course it is real estate. You own a title to the land and any improvements. All improvements (house, barn, septic system) increase the value of the land, and it is real property not personal if it is affixed to the land and not removable.
You have to get them to consider the entire 20 acres as your primary home, one parcel, and that the home that is rented out is already considered in the valuation of the parcel as shown in the tax statement.