<p>I own (free and clear) a small rental home, valued at approximately $60,000. I am pulling equity out of it to fix my residence in order to sell it. Which is better...to show the investment value at $60,000 or wait until the value will be only $10,000 (investment debt of $50,000) and I have approx. $48,000 in the bank?<br>
The rest of the picture is that my AGI is $13,448, recently divorced (ex-husband has income of $0 for 2006...seriously) and my cash on hand is approx. $3200...one daughter has $29, and the other has about $300. Thank you all for your input.</p>
<p>Look into the automatic zero efc: If</p>
<pre><code>* You can file a 1040A or 1040 EZ, or you are not required to file any tax returns at all; and
* Your adjusted gross income on the return (or on their W-2s if not required to file) is $20,000 or less.
</code></pre>
<p>then your Expected Family Contribution is zero, and your assets don't matter.</p>
<p>Try to make that work. If it won't, see if you can conduct your rental a small business, with a business tax return. New this year, the assets of small businesses are excluded from FAFSA.</p>
<p>If that doesn't work, you've got a 60K asset. You can pull cash our to reduce the value of that asset, but the cash will get added back in as an asset unless you spend it. You might be able to pull cash out of the rental and pre-pay your mortgage on your primary residence-- that would shelter it from the FAFSA. </p>
<p>If you have to report the 60K asset, it's probably not the end of the world-- you'll have an asset protection allowance of about 18K, so with the $3K cash on hand, about 45K in asset would be assessed at a rate of 5.65%, or about $2,500. You wouldn't have any contribution to the EFC from income, so your total EFC with the kids assets would still be below 3K, and make you eligible for Pell grants and significant aid.</p>
<p>Thanks...I looked into filing 1040A or EZ, but must file standard 1040, due to having deductions and rental income.
I'm also not able to use my rental as a "business" - seems you must have a legitimate business renting homes to use it as a business expense.
This time next year I'll be living back in my rental, having sold my current residence (hopefully) and moved, so that will bring more adventures.</p>
<p>Thank you for your reply.</p>
<p>:) Good luck on new adventures!</p>