<p>We have one child in college who receives financial aid from the college. We intend to move before the end of the year. We plan to lease our current small townhouse which is paid in full and will be using cash out from that as downpayment for the next house and to finish the basement in the new house. We do have an elderly relative who can not live on her own.We are trying to develop an inlaw apartment in the basement. The issue is between the cash out on one property and completion of the basement renovations we will have "cash" sitting in an account waiting to be disbursed to the contractors for renovating the townhouse for sale/rent. Will FAFSA and CSS/Profile see that as "their" money?</p>
<p>Not only will they see the cash as "available" money, both FAFSA and Profile will also now treat your townhouse as an asset and the rent as additional income. FAFSA only does not "count" the value of the primary residence. Since the townhouse is no longer your primary residence, any equity that you have it in will be factored into the equation.</p>
<p>Agree with what Chedva says. For FAFSA the property will now be considered as an asset if it is no longer your primary home. And if you borrow money against it and have not yet spent it on the new house that will be a reportable asset also. From a FAFSA point of view you would be better off borrowing as much as you can against the townhouse to reduce your equity in it (the reportable asset) and having the house that will be your residence paid off as that is not a reportable asset for FAFSA. But timing is really important - money in the bank on the day you complete FAFSA - even if it is borrowed and earmarked for the new house or basement is a reportable asset.</p>
<p>And of course the money from leasing the townhouse will also be reportable income though that will probably not have an impact till next year.</p>
<p>Thanks for the feedback. I realize that timing is everything on this. My husband was thinking this morning that borrowing more against the townhouse may be the route we have to take. We hope to settle before Thanksgiving. MIL's health is failing and we need to help out in the care. When we did this a couple of summers ago it was a nightmare because of limited space hence the reason for a larger home.</p>
<p>Can you take a line of credit out against the townhouse? Then it's available to pay contractors, etc., but isn't actually "sitting in an account" anywhere, and thus is considered only as it relates to the townhouse's equity.</p>
<p>Chedva - you're reading my mind. I was thinking about that this afternoon. I will check about the heloc tomorrow.</p>