Im wondering if rental properties are considered assets or if they count as a business for FAFSA purposes, because if they are a small business, they are not considered assets. also, would a small business, such as an LLC storage building be listed as an asset or would it be exempted because it is a small business? Thanks for any input!
Who owns the properties? If they are in the name of your parents, the equity in those properties is considered an asset on the FAFSA…and the income from the rents is considered income.
my father owns the properties, and they are vacant, so he is not recieving income from them. But what about a small business that he owns (a storage building rental).
The properties are considered assets even if they are not currently rented. The same is true of a small business.
Nearly every farmer, small business owner, and landlord that I have known who lives in the US has sent their children to in-state public universities because that is all that they could afford. The exception was a person whose business was so successful that $300,000 was not a big deal for their family. The good news is that there are quite a few very good in-state public universities in the US. The most obvious bad news is that the quality and affordability varies quite a bit from state to state, although there are also affordable very good universities outside of the US.
A small business with not more than 100 full-time or full-time equivalent employees (or any part of such a small business) that is owned and controlled by the family does not count as an asset for FAFSA purposes. CSS is a different story, and how it will be treated there will probably vary greatly from school to school.
I don’t know the answer, but this is the reason for the question. A small business is treated very differently than an investment.
My guess is that the real estate gets counted unless that is his actual main business, then I’m not sure. The storage units are a bit more grey. Paradoxically I would say if it is a small facility it gets counted, if it is a large complex with actual employees it doesn’t.
Hopefully someone who actually knows will answer.
Business = income is reported on Schedule C or in Box 1 of a K-1 or on an 1120.
The above is one reason why a ridiculous number of Calif students qualify for Cal Grants (UC/CSU) and/or Blue and Gold promise (UC). Many students’ parents own small businesses (restaurants, salons, dry cleaners, etc) and those assets/holdings aren’t counted. There was a parent who posted a couple of years ago that was moving his savings into a business account so it wouldn’t count.
But there is a risk in doing that. If the business is an LLC, those fund in a business account could then be used to cover debts of the business where if they were in the personal account of the parent.
Parents should consider all the risks.