It’s 25 acres family farmland rented out to a third party farmer for corn, beans, cotton, or whatever the flavor of the year is.
I assume this is defined as an investment farm BUT it is our family farm gifted to her from my dad who is a farmer. We don’t live on the farm and I don’t think she technically can be deeded land being a minor.
The fafsa form is contradictory.
“As of today what is the net worth of investments, real estate…”
“As of today what is net worth of your current businesses and/or investment farms? Don’t include a family farm or family business with 100 or fewer…”
Do I fill out the appraised value of my kids’ land and the wildly variable crop sharing income or not?
Your child’s income from any source must be declared on the FAFSA. I’m not sure who declares the asset if the student isn’t on the deed. Who is the recorded owner? Who pays the property taxes? Who does the third party farmer lease from?
How have you been handling this taxwise up to now? The students and parents tax returns will be requested by many financial aid offices.
You would not include the value of the farm, based on the way you have described it here. You would have to include any income she received from renting it, but I assume that is reported on her 1040 and therefore included on the FAFSA as part of AGI.
“Investment farm value does not include the value of a family farm that you (and your spouse) live on and operate.”
My interpretation is they are saying if you own a farm but don’t live on or operate it, then it can be considered an investment farm. (They also mention family businesses with less than 100 employees, but that seems irrelevant here.)
As mentioned above, the first question is whose name is on the deed and who gets the income from it. If your daughter has not been getting income from it, and her name is not on the deed, there seems to be no need to put any of this on a form, even if her grandfather has promised her the land.
If she has received income from the farm, you will need to be careful about how you fill out the forms. A financial aid department that is very thorough (such as those that also ask for the Profile form) could easily ask questions about whose farm it is if they see any farm income on her tax return or income statement.
@Wilson98 , you are correct … I forgot about that part of it (rare that it comes into play, as the few farms I have dealt with were operated by the owners). So yes, you would have to report the value, IF the deed is in her name.
Ok. Thanks so very much for the help.
To answer: I really don’t know to whom the rent is paid. It ends up in an account to help with college but I don’t even know whose name the account is in either. All this hasn’t involved me until now. I feel like an idiot for not keeping up but I got enough to keep track of without all this. lol
I know my dad and his accountant and lawyer have been handling this taxwise since it happened several years ago. My dad pays the property taxes so far as I can tell – perhaps from the college fund account he set up.
I’m going to ask my dad and see whose name is actually on the deed and get records of the income. I think a minor can’t be on the deed.
I believe he is giving her the rent money and it’s being put into an account to help pay for a tiny bit of college. It’s not a lot of rent money and there is a percentage drawn from the third party’s sale of the cotton or soybeans or corn or whatever, but the land itself is valuable and that’s what I’m really worried about if we have to declare it.
Seems like this process may require a lot of emails and photocopies of forms I’ve never heard of.
While you are figuring out who owns the land, you’ll need to figure out who’s name and the type of account the rent money is in, too. Maybe the accountant can help w/ the FAFSA to make sure you get it right.
It depends on the laws of the state where the land is located, but it certainly is possible for a minor to be the legal owner of real property (again, depending on the state in question).
OP- if you have never seen a bank statement or signed a document on behalf of your minor daughter, then I think there is a high probability that someone other than you or your D own the land (so no need to declare it as an asset), and the funds are going into an account NOT owned by your D, or a custodial account for the benefit of your D but just a nice thing a grandparent did to segregate some income with the intent of paying for some college expenses.
If no actual money has changed hands, and your D does not have access to the bank account where the proceeds go, and the grandparent is in fact the legal owner of both the land and the bank account- what he hopes to do, or plans to do, or wishes to do with the income off the land is not something you need to worry about right now. He can intend to give it to her but have an unexpected tax bill- whoosh, there goes the money. He may have told his lawyer that ultimately the land will be hers when he dies- and it may even be in his will- but if he still retains ownership and is still alive, she has no claim on the asset or its proceeds.
So stop worrying (for now) about FAFSA, and have a direct conversation with the grandparent where you ask to see a copy of the bank statement (which will tell you whose account it is) and the deed (which tells you who owns the land).
are there rules that a minor cant be on a deed? I’ve never heard that. What if parents die and child inherits property? Wouldn’t the minor then be the owner and on the deed? If they can’t be on a deed, whose name would be there? It doesn’t sound right that the dead parents’ names would remain.
Actually…whose income taxes have this rental income listed? Because really…anyone could be paying the bill. The question is…whose taxes do they appear on?
Is this a significant amount that is going to help your child pay for college?
It is also possible,that this gift is set up,as a trust of some sort with your daughter as the beneficiary.
There is a UGMA account (Uniform Gift to Minors Act) and similar UTMA (Uniform Transfer to Minors Act) which would be common way of giving minors ownership of a valuable asset, while letting the adults manage it until the child is older. These are generally assessed as a child’s asset on the FAFSA and thus count rather heavily against EFC.
Ok I’ve spent the time getting to the bottom of this. The land is deeded to her.
Rent money goes to her grandfather who endorses the check and puts into a farm checking account. She has no access to the checking account containing the rent money.
Grandfather pays property and income taxes. The farmer leases from her grandfather.
There is no trust.
Only tricky part is all this is split 50/50 with her brother.
We have the property appraisal documents. Assuming we need 2015 appraisal values which, unfortunately, were reporting higher value than now.
Sooo it looks like we will be reporting property value. Thank you all for your info and time.
“If no actual money has changed hands, and your D does not have access to the bank account where the proceeds…” I just want to point out that may not be the determinant, in all cases. OP says no trust, but a trust is a good example of funds not seen yet or not to be seen for some time forward-- and yet to be reported. (CSS, at least.)
The asset value to report is whatever it is as of the date the form is completed. The 2015 value has nothing to do with completing a 2017-2018 or 2018-2019 FAFSA.
How is it that your daughter has no access to or control of the income from the property that she owns? Does your father have a life estate in the property?
If this property deed is in the name of the daughter (and brother)...wouldn't THEY need to have rent generated from it on their tax returns?
If the deed is in the name of the brother and sister only...why would,the rent be going to the grandfather...and these property owners have NO access to the money.