<p>Okay, so here's my scenario. My parents decided to invest in real estate a while back, we currently own 3 houses. One in which we live in; 2 of these house are completely paid off, while the third house is only half paid off. Although my family appears to have a good worth of assets, we are actually losing money because of those assets (property taxes, insurance, etc.). My dad has been trying years to sell the second house, but no one is willing to buy it.</p>
<p>Okay, so here's my question. I was wondering if it would be "legal" to give the house we have paid off to a relative, so that my parents no longer own it. So if next time I do my CSS profile, I wouldn't need to include that house as an asset. Would my college find it as falsely reporting? Would they get suspicious?</p>
<p>The school probably would be suspicious if the house just mysteriously disappeared - selling a house that is an investment property has a tax impact which they would expect to see reflected on your taxes.</p>
<p>If they actually legally give the house to someone (rather than pretend they have to try and get financial aid) then that also has a tax impact. Your parents would probably owe gift taxes on the gift, which would probably negate any FA benefits.</p>
<p>Your parents need to run the numbers with various scenarios - both their taxes and your particular college’s finaid. No one can really tell you how it will all play out. I’m sure your parents aren’t the first to think of that scenario.</p>
<p>Let’s be honest. Your family won’t REALLY be giving away this valuable piece of property. If the property became marketable at some point, I really doubt your family would let this relative sell it and keep the money.</p>
<p>I think it’s kind of far to say it’s fraud…</p>
<p>My parents were planning to give ownership of the house to my mother’s younger brother who recently immigrated to the U.S. I guess it won’t be completely a “giveaway,” but after my uncle has a few years to settle down he’s going to slowly pay my parents back. I’m pretty sure my parents are willing to give it to him for free, but my uncle insists on paying back.</p>
<p>If you are already in a school that awards their own funds in financial aid then I would imagine they would not look to kindly on your parents giving away assets and then expecting more in the way of financial aid. I know if I were the school you would not get more aid based on this scenario.</p>
<p>If your parents are genuinely planning to do this because they want to give the property to the brother then they need to consult a tax accountant about the gift tax implications. There gift tax rules are quite complicated but basically they (your parents) may either owe a large chunk of taxes on the gift of the house as it far exceeds the tax free amount they may give to an individual in a year, or they may reduce the amount of their estate that will be untaxed on their death.</p>