<p>Here is our situation. My husband worked in construction and with the economy has been laid off and only worked 6 months last year and also was in a bad accident, so we have medical bills up the kazoo. He will be able to go back to some form of work in a couple of months. I am self employed at home and we made very very little money last year, just enough to scrape by. I am filling out the FASFA for my child who will be a sophomore in the fall. The problem now is that at the end of the 2009, we inherited my grandmother's house, which is great, but there is no way we can sell it right now. Everything around it has been for sale for years and we would get pennies on the dollar for it. Besides that, we would most likely be better off to wait for the economy to rebound a little bit before selling it. This will also go for retirement since we have had to use most of our savings to live on and keep our house over the last two years. So, my question is how is this house going to impact the FASFA for my daughter to get a grant and do I have to claim it? I am not trying to be one of those who abuses the system. We are not like that at all and my husband has collected a few months of unemployment, but we do not and have not ever utilized any other forms of assistance. My main concern is that I want my daughter to be able to continue going to college and it would really be a shame if inheriting a piece of property keeps her from doing so. Any advice is greatly appreciated here. TIA</p>
<p>I think you’ll just have to fill out the FAFSA and see how it works out. It’s kind of hard to say, but you will have some asset protection, and beyond that amount assets are only assessed at 5.6%.</p>
<p>It’s possible your husband could be considered a dislocated worker - I’m not sure exactly how that works but if he is and your income was below a certain level, that would qualify you for an automatic 0 EFC and assets would not be considered. Definitely do some research on that.</p>
<p>But in any case, once you file the FAFSA, if the inherited house has too severe an impact you can ask for a professional review by the college.</p>
<p>Another way to think of it is that the house is an asset, whether you can sell it now or not. If you were to have to borrow, then presumably the sale of the house at some point in the future could pay down that debt. That’s really what assets are after all, and why they are considered in the FA formula.</p>
<p>I hope it all works out for you.</p>
<p>I hope Swimcatsmom sees this thread. She would be able to tell you the exact criteria for qualifying for the simplified means test…if you qualify, you do not report assets. Income for 2009 would have to be below a certain level and you would also have to qualify via one of the other criteria which include dislocated worker, I believe.</p>
<p>Medical bills are considered on a case by case basis at the colleges. Since your student is a sophomore, you might want to contact their financial aid department with the specifics of your situation re: the medical bills.</p>
<p>You can qualify for the simplified needs option, where no assets are considered, if your 2009 AGI is $49,999 or less and your husband is a displaced worker (see pg 4 of link). Otherwise, as 'rentof2 said, a portion of your assets will be excluded in the EFC formula. The asset protection allowance varies by the age of the older parent but can be found in this document (pg 19):</p>
<p><a href=“https://ifap.ed.gov/efcformulaguide/attachments/111609EFCFormulaGuide20102011.pdf[/url]”>https://ifap.ed.gov/efcformulaguide/attachments/111609EFCFormulaGuide20102011.pdf</a></p>
<p>If you do have to value your inherited property, remember to value it for FAFSA as if you needed to sell it immediately and deduct any repair costs and selling costs that would be necessary.</p>
<p>Things may have changed in the last decade, but generally when you inherit property you give it a “basis” or value. Ask the lawyer who is handling the estate about this and if you can use that “basis” as the value of the investment for FAFSA purposes. If not, at the very least call a real estate agent and get some comps or get a fair market value as if you had to sell it quickly so yes, you want the value at this point in time…or pennies on the dollar so to speak if you are in a depressed housing state. It could have an entirely different value next year when you fill out FAFSA, but for real estate I always call and find out what the value is that month as if we had to sell and close within 30 days. I save the info and stick it in my FAFSA file. If you do qualify for simplified needs then yes, the house is moot as it is not considered.</p>
<p>Are you living in that house? If that home is your primary residence, then it counts not at all.</p>
<p>If you already own a home and this is a second home, then it is an asset to be declared by you; however you would declare the net value- so the true sale value of the house minus all the things you would pay off- mortgage etc. So, if it is a $100,000 house with an $80,000 mortgage, you have a $20k asset.</p>
<p>[Federal</a> Student Aid - IFAP: iLibrary - EFC Formula Guide](<a href=“http://www.ifap.ed.gov/ifap/byAwardYear.jsp?type=efcformulaguide&awardyear=2010-2011]Federal”>http://www.ifap.ed.gov/ifap/byAwardYear.jsp?type=efcformulaguide&awardyear=2010-2011) is the formula so you can see if the equity will affect you. </p>
<p>'You would use the actual sale value today for valuing the home.</p>
<p>How about renting the house out? At least it would be income instead of liability.</p>
<p>^^that might help taxes but in terms of college financial aid forms the house, whether it’s a rental or vacant, is still an asset and has a value that is reportable as an asset. You would almost need to run various tax scenarios to see if turning it into a rental, depreciating it, the expenses, etc. is of value.</p>
<p>And remember…if you rent the house, the rental income is added as INCOME…plus the value of the house as an asset.</p>
<p>And if you’re not able to take the simplified needs option (which would be best), remember that you should value the house at what you could sell it for in a cash sale, today, with no fix up, clean up, or time to let someone figure out if they can qualify for a mortgage. A local real estate agent can help you come up with a quick cash sale value, but only if you explain that you really mean “as is condition with a very quick, cash closing”. That may legitimately be a lot less that you’re currently thinking the house might be worth.</p>
<p>^^yes, I believe at one point in time FAFSA or some FAFSA instructions said “the amount you could sell it for if you had to sell it tomorrow.” I’ve never requested a valuation from my real estate agent for a cash closing, but always asked for a valuation if I wanted them sold and closed within 30 days. It is my understanding that this is an entirely legitimate way to value real estate for FAFSA/CSS.</p>