<p>My mom would like to purchase a home in cash, but put the house under my name. If I had a home in my name would this affect my financial aid. I have currently been estimated to recieve a grant of about 3,000$</p>
<p>Yes, since you have to put your assets on FAFSA.</p>
<p>Yes…a home in YOUR name, fully paid for, would be a huge asset in your name.</p>
<p>Why would your parent do this? If the value of that house is $200,000, your FAFSA EFC would increase by about $11,000 just for that asset.</p>
<p>What kind of grant are you receiving? Is it a Pell Grant or a school grant? If a Pell, you would no longer be eligible for it as your EFC will become too high. If it is an institutional grant, your need would be reduced by $11,000 so it’s very possible you would lose that grant but really only the school can tell you what they will do about grant money they have awarded.</p>
<p>I’m hoping this is an institutional grant, because if it’s a Pell, I just have to wonder where the cash to pay for the house is coming from?</p>
<p>If you lose that $3000 in grant money, will it affect your ability to attend college, or do you have the ability to pay regardless?</p>
<p>I don’t know how FAFSA would treat this situation. The primary home is an exempt asset for certain, we all know, when in the parent’s name. Is it if it is the student’s name?</p>
<p>Your mother should save the cash so she can help you with college. How was she planning to pay for college?</p>
<p>A primary home is not a reportable asset. An independent student who owned and lived in the home would not have to report it. I’m also not sure how it would be treated if you are a dependent but the family home is in your name. It’s unusual.</p>
<p>If it is not the primary home, then 20% of an asset in your name goes to the EFC. If the asset is in the parent’s name, only 5.6% goes to the EFC (after some asset protection that parents have - dependent students have no asset protection allowance)</p>
<p>If your Mom has $200,000 in cash, it is a little surprising you are eligible for any grant money.</p>
<p>
It depends. Does the school use FAFSA or CSS Profile to evaluate your need?
Worst case is you lose that grant, it may not be a significant hit to your family (if your family have enough cash to buy a house outright.)</p>
<p>OY my bad! If the home is in the student name, on FAFSA, it will be treated as an asset. That would be 20% …so for a $200,000 home, it would be $40,000 added to your family contribution…and methinks you would lose your $3000 grant money.</p>
<p>Seriously, this post makes no sense. If someone can pay CASH for a home, why would they be worrying about a $3000 grant?</p>
<p>OP, please give us a little bit more information. A primary home is not a reportable asset, I know for parents, on the FAFSA. Swimcatsmom states that for independent students, it’s is also not a reportable asset for FAFSA. Thumper, is it for certain that a primary home in a student’s name, if the student is independent is a reportable asset and get treated as such which would be as you stated, 20% directly on the value of the house? I don’t know. Perhaps Kelsmom or Sybbie would.</p>
<p>As for someone who can has cash, there can be a lot of reasons why it should NOT go for college tuition. It could the result of an inheritance, settlement of a claim, of a divorce, etc and a one time thing that has to last. A lot of my friends who were divorced got what looked like large settlements but that it was all they were getting at the end of a long marriage, that they were middle aged and had perhaps not worked main bread winner jobs put them at disadvantage at finding anything at a living wage. The settlement had to stretch for a while until they got on their feet and some of them never quite did. You can have $200K in the bank and still have an auto zero EFC if your income is under a a certain thresh hold.</p>
<p>What is the reason your mother wants the house to be in your name, rather than hers? In her name, it would not be counted as a FAFSA asset. Also for many PROFILE schools, its value would be capped by income multiples. That’s the other thing. If you are looking at PROFILE schools, the house would most likely be counted heavily as a student asset.</p>
<p>Is the $3K grant a PELL grant, a state grant , a merit award, financial aid? Please give more info as it could make a difference in what we can advise.</p>
<p>Where does it say this is an independent student? It sounds to me like this is a DEPENDENT student. For a DEPENDENT student, a home in their name would be a reportable asset. And 20% of the equity would be assessed.</p>
<p>If this is an independent student, the primary residence is not reported,</p>
<p>The above is for FAFSA purposes.</p>
<p>See <a href=“http://www.fafsa.ed.gov/fotw1314/pdf/PdfFafsa13-14.pdf[/url]”>http://www.fafsa.ed.gov/fotw1314/pdf/PdfFafsa13-14.pdf</a></p>
<p>
applies to questions 41, 42 (student’s asset), 89, & 90 (parents’ asset). Also questions 41 & 42 apply to both dependent & independent student.</p>
<p>Ok…I think we need a tax expert here. The cost of a house would certainly exceed the gift allowance allowed by the IRS. How is the overage treated? How is this treated for the recipient and the giver of the gift?</p>
<p>I also don’t think we have sufficient information. Does the OP have a permanent living address other than this house? Or is this going to be the family permanent residence?</p>
<p>It all seems odd to me. The responses here are making it sound like a family could purchase a house in a student’s name, and if the student lives in it, this residence would not be included on the FAFSA. Does this mean that if the parents live in one house,and the student lives in another…NEITHER house is reported on the FAFSA so long as the parents are the owners of one (and the student doesn’t live there) and the student owns and resides in the other?</p>
<p>For some reason that doesn’t sound right to me…but maybe it is. </p>
<p>Wealthy folks…there you go. If this is true, take some of those excess savings assets and just purchase a house in your kid’s name for them to live in…no asset declaration for that house…or the parents.</p>
<p>Is that REALLY how it works?</p>
<p>Sounds to me like the parent is trying to protect assets from creditors. There could be other legal implications – I think that we are not getting the full story here. (The kid might not be getting the full story either).</p>
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</p>
<p>1) The entire amount (not just the overage) is a gift. The amount in excess of the annual exclusion uses up the donor’s unified credit.</p>
<p>2) It’s a nothing for the recipient. The donor has to file a 709, but is unlikely to have any other consequence.</p>
<p>3) Like calmom, I suspect a scheme.</p>
<p>Ally…so if I understand you correctly, this form would need to be filed for this gift exceeding the allowed annual amount…and that is it? </p>
<p>Then why is there a limit when all you need to do is file a form? Sorry to high jack the thread!</p>
<p>To the OP, what does your dad think of this plan?</p>
<p>There is a lifetime limit on the amount an individual, couple, or estate can give as gifts. Once that lifetime limit is reached, then a federal (and in some states, a state) gift tax kicks in. The tax is paid by the donor.</p>
<p>The lifetime limit on gifts has varied depending on what limits are set by Congress. I think it’s around $6M for individuals/estates currently and $12M for couples right now.</p>
<p>Jazmin…we need more info.</p>
<p>Is this your family’s only home that you’ll all live in? Or does your family own a home and your mom wants to buy another home? </p>
<p>Why is your mom putting the home in your name? </p>
<p>Are you under age 24?</p>
<p>I suspect something’s up…the mom got an inheritance and is trying to hide it? the mom is trying to hide money in a divorce? the mom is trying to hide money from creditors? The parents own a business that deals with a lot of cash, and this is an attempt to hide it to “look poor”.</p>
<p>There are a lot of reasons why a family may do this. There can be a second marriage issue, other heirs, there could be a divorce settlement, the parent could have a terminal disease, and, yes, mom could want to hide the money as well. You just never know. I’ve seen this done for good reason, but usually, it isn’t the advised way to go for a number of reasons.</p>