Do rental properties generating income need to be reported on FAFSA?

Yes, you definitely need to report rental property on the FAFSA! It counts as an investment asset AND you need to report the rental income too. I made this mistake last year and it caused major headaches during verification. The market value of the property minus what you owe on it gets reported as an asset. The rental income should already be on your tax return which FAFSA pulls from.

my parents own 3 rentals and we just put the county tax assessment value for each one. nobody ever questioned it. but yeah you def have to list the properties.

Let me clarify the correct way to handle rental properties on the FAFSA: 1. Yes, rental properties ARE considered investments for FAFSA purposes (not businesses unless you own 5+ properties) 2. For the asset value: report the current market value minus any outstanding mortgage debt 3. The rental income: This is already included in your AGI from your tax return, so you don't report it separately again 4. Using a county tax assessment is generally acceptable for valuation, though some prefer to use conservative real estate estimates The key is to be consistent in your approach. The rental property absolutely needs to be reported as an investment asset on the FAFSA, but don't worry about double-counting the income - it's already in your tax information that gets transferred to the FAFSA.

wait i thought if you use the property as your primary residence AND rent part of it out (like a duplex where u live in half) then you don't have to report it?? now im worried i messed up our fafsa

OK but what about depreciation?? We claim depreciation on our rental property on our taxes which lowers our AGI, but I've read that the FAFSA doesn't recognize depreciation as a real expense since it's just a tax thing? Is that true? This whole system is so FRUSTRATING!!

I had a similar situation with our rental condo when filling out my son's FAFSA. Called FSA multiple times but kept getting disconnected or put on hold forever. Finally used Claimyr (claimyr.com) to get through to an actual person at Federal Student Aid. Their service connected me to an agent in about 10 minutes who explained exactly how to report our rental property. They have a video showing how it works: https://youtu.be/TbC8dZQWYNQ The agent confirmed that rental properties count as investments unless they're part of a larger business with multiple properties. They also walked me through how to calculate the net value properly.

The FAFSA treatment of rental properties depends on several factors: 1. If it's your primary residence and you rent out rooms/a portion: Only the rented percentage counts as an investment 2. If it's a separate property used entirely for rental: The entire net value (market value minus debt) counts as an investment 3. If you own multiple properties as a formal business: Different rules may apply Regarding your LLC question - if it's a single-member LLC that's disregarded for tax purposes (passes through to your personal taxes), then you still report it as an investment on FAFSA. If it's a multi-member LLC that files its own tax return as a partnership or corporation, then the reporting gets more complex. You've received mostly accurate advice here, but I recommend reviewing the Federal Student Aid's Asset Reporting guidelines to be certain.

just wanna say this whole system is RIGGED against families trying to build wealth!! we scrimp and save to buy a rental property as our retirement plan and we get PUNISHED on FAFSA while families who blow all their money on fancy cars and vacations get more aid. how is that fair??!!

Thanks everyone for all the helpful information! Based on what I've learned, we'll report our duplex as an investment asset on the FAFSA using the market value minus the mortgage balance. Since it's a single-member LLC that passes through to our personal taxes, we'll treat it like we own it directly. I'll double-check the Federal Student Aid guidelines to make sure we're doing it correctly. If I get stuck, I might try that Claimyr service to speak with someone directly, especially about how the LLC structure might affect things. Really appreciate all the advice!

Great thread! I went through this exact situation last year with our rental townhouse. One thing I'd add is to make sure you're consistent with how you report the property value across all forms if your student gets selected for verification. We used the county tax assessment value on our FAFSA, but then the school's financial aid office asked for additional documentation during verification. Having the county assessment printout ready made that process much smoother. Also, don't forget that if you do any major improvements to the property during the year, that could affect the market value you report. Keep good records of everything!

Just wanted to add my experience as someone who's been through this process multiple times with rental properties. One thing that really helped us was creating a simple spreadsheet to track all our rental property info year over year - property address, acquisition date, current market value estimate, outstanding mortgage balance, and net equity. This makes filling out the FAFSA much faster each year and helps ensure consistency. Also, if you're using online valuation tools like Zillow or Redfin, I'd recommend taking the average of 2-3 different estimates rather than relying on just one, as they can vary quite a bit. The financial aid offices seem to appreciate when families show they've done their homework on property valuations rather than just picking a random number.

Just want to add a quick note about timing - make sure you're using the property values and mortgage balances as of the date you file your FAFSA, not necessarily what they were at the end of the tax year. Property values can change significantly, and if you've made mortgage payments throughout the year, your equity will be different. I learned this the hard way when our property value dropped between tax filing and FAFSA submission, and I had to go back and correct our original submission. It's a small detail but can make a difference in your calculated asset value. Also, if you're refinancing or doing a cash-out refi during the FAFSA year, that can complicate things too, so plan accordingly!