<p>When I fill out the FAFSA form in January, what criteria do I use to determine the value of the rental home we own. It was purchased for $23,000 about 7 years ago. We took out a home equity loan on our primary residence to pay for the rental.</p>
<p>The value should be the net proceeds you would obtain from the sale of the house in a fairly quick sale. Can you tell that from the real estate sales in the area?</p>
<p>I am not sure what the question is</p>
<p>If the question is “How do I find the value of the house?”
The answer is in what somemom said. You can ask your real estate agent and they should be able to run some comps for you and tell you what the house would sell for in today’s market.</p>
<p>If the question is, “I know what it would sell for today but is that the value I put on FAFSA or do I put some other value”?</p>
<p>Not a tax lawyer or accountant, but here is where I see the catch. Let us say the property is worth $40,000 today and you have an home equity loan on your primary residence of say $15000. However this $15,000 is secured against your primary residence and is not a liability against your rental property. </p>
<p>Now for FAFSA purposes, your rental home is worth $40,000 and the $15,000 in home equity loans will not matter as it is considered discretionary as it is against your primary residence. So you would put the value of hour rental home as $40,000 not $25,000 ($40,000-$15,000= $25,000). If on the other hand the rental property was secured by a mortgage, then your net value is the value of the house less the mortgage i.e you could put $25,000 in that case.</p>
<p>Now for taxes and capital gains, the calculation will be different, as you have a basis in the house (less depreciation over the years).</p>
<p>I would appreciate if any one else can weigh in with their opinions as this is my interpretation and I may be wrong.</p>
<p>why not try this site: FHFA.gov. It simply takes market growth and applies it to number of years owned and initial cost.</p>
<p>The mortgage is against your primary home so will have no affect on FAFSA as the primary home is not reported on FAFSA. </p>
<p>The rental property must be reported at it’s current value (which cannot be reduced by the mortgage on your primary home even if that loan was used to finance the purchase of the rental property).</p>
<p>Call a local real estate agent and ask for some recent comps. Look at the length of time it took to sell and adjust accordingly if needed. Keep the e-mails or paperwork in a folder in case of an audit situation. Correct, if the home equity loan is against your residence it has nothing to do with the rental in terms of decreasing the equity in the rental.</p>
<p>Why not use the tax assessment value? That way you also have firm documentation of where the number came from.</p>
<p>Thanks so much for the replies. Yes, I do understand the home equity loan is not to be subtracted from the value of the rental since it’s on my primary home. I just wondered if there was a “standard” way FAFSA accepts what the home value is. Has anyone else had a rental that they claimed as an asset on the FAFSA? If so, how did you arrive at the market value? Is it the market value that is required and not the tax assessment value? Or, if the tax assessed value is 35% of the home’s market value, perhaps I could use that number to figure out what the other 65% of its value is and report that? That concept makes sense.</p>
<p>I do appreciate all the replies! Thank you so much!</p>
<p>I don’t know about your state but in mine the taxable values and assessed values have so very little to do with the sellable value of a home. I use comps…although multi-family housing isn’t moving in michigan…600+ days or more on the market and most people give up and pull the listings. Should be interesting in January to try and get a value…right now they are a huge liability LOL.</p>
<p>[FinAid</a> | Professional Judgment | Rental Property and Multi-Family Residences](<a href=“Your Guide for College Financial Aid - Finaid”>Your Guide for College Financial Aid - Finaid)</p>
<p>Dig through that site for all sorts of serious financial aid tips. This quote reflects determining rental value. Note the ref to the Fed Housing Index Calculator, found at FHFA.gov- and the comment here that it calcs the “minimum derived value.” You will need to find what works for you.</p>
<p>“Net market value may be obtained by using real estate listings (from the local newspaper or multiple listing service or property tax assessment site) to get a ballpark figure for similar size properties in the same location. There are also web sites like HomeRadar, Zillow and Domania that provide ballpark estimates. Another method involves using the Federal Housing Index Calculator to calculate the minimum derived value for the property based on its original purchase price. This yields a conservative lower bound on the value of the property.”</p>
<p>Especially today, it’s tough to guesstimate what a property could sell for. I used the HPI calculator and put in notes (is it the CSS that allows notes?) that I had estimated value from a fed calcluator.</p>
<p>the light blue is actually the link I refer to</p>
<p>lookingforward, I clicked on the link and will look at in more depth after work today. It looks like an informative site, I appreciate that you provided it. The replies I’m receiving offer great advice that make sense. I want to do my homework on the matter before January rolls around; this will be my 1st FAFSA form to fill out.</p>
<p>I live in a small town of about 5,000 people. There are at least 50 homes for sale here at the present time. Not much in terms of well-paying jobs in this area, that’s the reason for so much for sale. The price of homes is lower than it has been. I’ll have to figure the value of my rental with the info provided. I know that will put me in the right direction. </p>
<p>I love the internet!</p>
<p>Again, it may cost you a little bit, but if you really want it, you can get a professional appraiser to do it for you. A local real estate company or mortgage company can tell you that but it may you cost about $300-500. I would start with Zillow.com as my first step.</p>
<p>^^True,. but comparables do a better job of “telling” you what property is selling for. For FAFSA you need to value the property for what you could liquidate it for quickly since it’s not a liquid asset. You can’t write IOW checks to a college for tuition that say “when I sell the rental property in 600 - 900+ days.” Believe me if I could I would. Banks in general aren’t funding multi-family residences (at least in the midwest) creating further downward pressure. It’s all fine and good if it’s appraised at $250,000 but if you can’t sell it for more than $190,000 then that’s what it’s worth. Just my opinion.</p>
<p>Zillow is unreliable. It is not unusual to see houses be 20% or more too high, or 20% or more too low, on the same street, according the my RE agent wife.</p>
<p>Comps are the best measure, you just have to be careful getting a good match, particularly condition, which can be very hard to judge from an outside picture or a satellite shot. Many, maybe even most, rental properties are in horrible condition, because the owners milk them for every penny and don’t spend anything on maintenance.</p>
<p>Rental properties in the area where my rentals dropped at least 40%. I was able to legitimately report a value of zero for mine on my first FAFSA. That flushing sound you hear - all my equity. :)</p>