FAFSA confusion: Report farmland as investment, farm asset, or neither?

if its losing money i wouldnt report it as a business, pretty sure theres an income requirement for that. just put it under investments

Thanks but are you sure? That's what I was leaning toward but then got worried because we do file Schedule F with the IRS which is specifically for farming.

This is actually a common question with a specific answer. The FAFSA has clear guidelines about farm reporting. Since you file Schedule F, the IRS considers it a farm operation regardless of profitability. However, the classification on FAFSA depends on family participation and purpose.\n\nIf your family doesn't provide more than 50% of the labor AND doesn't materially participate in management decisions, it should be reported as an investment property under 'net worth of investments' (current market value minus debt). The fact that someone else cuts the hay and you're not actively farming supports this classification.\n\nIf your family DOES provide significant labor or management, it would be a farm asset. Given what you've described, investment property sounds correct.

That's incredibly helpful, thank you! We definitely don't provide 50% of labor (we provide 0% actually) and only make basic management decisions about when to mow. So it sounds like investment property is the right choice. I appreciate the clear explanation!

I'm in a similar situation but we actually have cattle on our land! From what I've learned dealing with this last year, it all comes down to MATERIAL PARTICIPATION in the farm operation. If you're just letting someone else cut hay and you're not actively engaged in day-to-day operations, it's an investment. \n\nMy financial aid advisor said the key is whether you're running a farming business vs holding land that happens to have agricultural use. It sounds like you're in the second category. Also, the \

This is so confusing tho...if it's a investment in LAND wouldn't that count as real estate investment? And do we even need to report that? I thought only liquid investments count on FAFSA.

Yes, land is considered a real estate investment and DOES need to be reported on FAFSA. All investments, including real estate (that's not your primary residence), need to be reported. Liquid investments, stocks, bonds, real estate - they all count as investments for FAFSA purposes. The only real estate you don't report is your primary home.

I have the exact same issue and we did the same research. We have 50 acres that we just let a neighbor harvest hay from. The financial aid officer at our kid's college told us to report it as an investment property because we aren't

Thank you for sharing your experience - that's really reassuring! It sounds like our situations are almost identical. I'll go with investment property.

The key distinction is material participation. According to the FSA guidelines, a farm must be an active business that produces agricultural products for sale to qualify as a \

Wow I hate this system so much. Why is there so much COMPLEXITY with every single question!? It's like they design the system just to trick people into making mistakes so they can deny aid. And of course you have to PAY someone just to get basic help from a government agency that should be HELPING students. The whole thing is a racket! 😡

I feel this comment in my soul. Took me three attempts to get our FAFSA right last year because of all these weird asset classifications.

Thanks for the detailed explanation. That clarifies exactly what I needed to know. I'll check out that service too since I have a couple other questions I need to resolve before the submission deadline.

My dad had a farm and we classified it as investment on FAFSA. Ended up getting a Pell Grant and good aid package. Just saying.

That's encouraging! I'm hoping for a decent aid package too. It seems like investment classification is the consensus here.

Wait I'm confused now. If you report losses on your tax return for the farm, doesn't that mean it IS a business? My accountant always told me hobby farms can't report losses, only legitimate businesses can deduct losses. But then for FAFSA it's not a business? The inconsistency between IRS and FAFSA rules makes my head spin.

You've identified a genuine inconsistency between IRS and FAFSA rules! For IRS purposes, filing Schedule F means you're treating it as a business activity. But FAFSA uses different criteria focused on material participation and purpose rather than just tax filing status.\n\nThe IRS allows farm losses for legitimate farm businesses (which yours technically is for tax purposes), while still potentially being classified as an investment for FAFSA. \n\nThis is one of many areas where tax code and financial aid rules don't perfectly align. Material participation is the key for FAFSA - if you're not actively running the farm operation, it's an investment asset regardless of tax treatment.

This reminds me of when my parents had to report their rental property on my FAFSA back in 2011. They kept getitng different answers from different people. Eventually they just picked the option that gave me the most aid lol. No one ever questioned it. Not saying that's the right approach but sometimes you just gotta do what you think is best after making a good faith effort to figure it out.

FSA's website says investment farms are \

The distinction is between an \

Ok that's actually a helpful explanation even though it's STILL RIDICULOUS how convoluted they make these rules!! Thanks for clarifying.

BTW don't worry too much - they have more relaxed rules for farm assets in general compared to other investments. I think they know farms fluctuate in value and income a lot more than other business types.

Thanks everyone for all the helpful information! Based on all your advice, I'll be reporting this as an investment property under the investment section. Since we don't materially participate in the farming operations and it's not our primary source of income, this seems to be the correct classification despite filing Schedule F. It's frustrating how complicated this all is, but I feel much more confident now about how to proceed.

I went through this exact same situation last year with my son's FAFSA! We have 60 acres that we lease out for hay production and were so confused about the classification. After talking to three different financial aid offices, they all confirmed what Aaron said - it's about material participation, not tax filing status. Since you're not actively involved in the day-to-day farming operations, it's definitely an investment property. The fact that you file Schedule F doesn't change the FAFSA classification. Just make sure to use the fair market value minus what you owe on it. Good luck with your daughter's aid package!

As someone who just went through this process with my daughter's FAFSA, I can confirm what others have said about the material participation test. We had a similar situation with inherited farmland that we rent out to a local farmer. Even though we file Schedule F and technically have a "farm business" for tax purposes, the financial aid office at her college told us it should be reported as an investment since we don't actively participate in farming operations. The key question they asked was whether we make day-to-day management decisions about planting, harvesting, livestock, etc. Since the answer was no (just like in your case), it's an investment property. Don't overthink it - the consensus here is correct!

Just wanted to add my perspective as someone who works in college financial aid - you're absolutely on the right track with investment property classification. The material participation test is really the gold standard here, and from what you've described, you clearly don't meet that threshold. We see this situation fairly often with families who own agricultural land but aren't actively farming it themselves. The Schedule F filing can be confusing, but remember that tax classification and FAFSA asset classification serve different purposes and use different criteria. For FAFSA, it's all about whether you're running an active farm business versus holding land that generates income. Since someone else does all the work and you just collect hay revenue, it's definitely an investment. One tip: make sure you have good documentation of the land's current market value since that can sometimes be questioned during verification if the amount seems unusually high or low.

As a newcomer to this community, I just wanted to say how incredibly helpful this entire discussion has been! I'm facing a very similar situation with family land that we lease for grazing, and I was completely lost on how to classify it for FAFSA. The material participation test that everyone keeps mentioning makes so much sense - it's not about what you file with the IRS, but about whether you're actually running the farming operation day-to-day. Reading through all these real experiences from people who've been through this exact situation is way more valuable than trying to decode the official FAFSA instructions. Thank you all for sharing your knowledge and helping families like mine navigate this confusing process!

As someone new to this community and currently struggling with my own FAFSA, this thread has been absolutely invaluable! I'm dealing with a similar situation where my family owns some agricultural land that we rent out to a local farmer. Like many of you, I was completely confused about whether to classify it as a farm business or investment property. The material participation test that keeps being mentioned throughout this discussion finally makes it clear - since we're not involved in the actual farming operations, just collecting rent, it should be reported as investment property. It's so frustrating how the FAFSA instructions don't clearly explain these nuances, but seeing all your real-world experiences and hearing from someone who actually works in financial aid gives me confidence I'm on the right track. Thank you all for creating such a helpful resource for families navigating these complicated decisions!

As a newcomer to this community, I wanted to thank everyone for this incredibly detailed discussion! I'm in almost the exact same situation with 40 acres that we have cut for hay by a neighbor, and I've been stressing about this classification for weeks. The material participation test everyone keeps referencing really clarifies everything - since we're not involved in the actual farming operations beyond basic decisions about timing, it's clearly investment property regardless of filing Schedule F. What really helped me was hearing from actual financial aid professionals and families who've been through this process. The distinction between tax purposes (where Schedule F makes sense) and FAFSA purposes (where actual participation matters) was the lightbulb moment for me. This thread should honestly be required reading for any family with agricultural land trying to navigate FAFSA! Thank you all for sharing your experiences and making this confusing process so much clearer.

As someone completely new to this community and currently drowning in FAFSA confusion, this entire thread has been absolutely incredible! I'm dealing with a very similar situation - we own about 100 acres that we lease to a neighboring farmer for corn and soybean production. Like so many of you, I was totally lost on whether this should be classified as farm business or investment property, especially since we also file Schedule F with the IRS. Reading through everyone's experiences and especially the explanations about material participation has been such a relief. The key insight that tax classification and FAFSA classification serve different purposes really clicked for me. Since we're basically just landlords collecting lease payments and not involved in planting decisions, equipment choices, or day-to-day operations, it's clearly investment property despite the Schedule F filing. What really stands out to me is how consistent the advice has been from multiple people who've actually been through this process, plus hearing from someone who works in financial aid. The material participation test makes so much sense - if you're not actively running the farming operation, it's an investment regardless of what forms you file with the IRS. Thank you all for creating such an amazing resource for families trying to navigate these incredibly confusing FAFSA rules. This discussion has given me the confidence to move forward with investment property classification, and I'm so grateful to have found this community!

As a newcomer to this community, I have to say this thread has been absolutely invaluable! I'm currently filling out my son's FAFSA and facing almost the identical situation with 65 acres that we rent out for cattle grazing. Like so many others here, I was completely confused about the classification since we file Schedule F but aren't actively involved in the day-to-day operations. The material participation test that everyone keeps mentioning finally made it click for me - it's not about what tax forms you file, but whether you're actually making the farming decisions. Since we just collect rent from the rancher who manages everything (cattle care, pasture rotation, feed decisions), we're clearly not materially participating in the farm operations. What I found most helpful was hearing from the financial aid professional who explained that tax classification and FAFSA classification serve completely different purposes. That distinction really cleared up my confusion about why filing Schedule F doesn't automatically make it a farm business for FAFSA purposes. Thank you all for sharing your real-world experiences and creating such a supportive resource for families trying to navigate these complex FAFSA rules. This discussion has given me the confidence to classify our land as investment property, and I'm so grateful to have found this community during what felt like an overwhelming process!

As a newcomer to this community, I just wanted to express my gratitude for this incredibly thorough and helpful discussion! I'm currently working through my daughter's FAFSA and dealing with a very similar situation - we own 75 acres that we lease out for soybean and corn production. Like so many others here, I was completely stuck on whether to classify this as farm business or investment property, especially since we file Schedule F. Reading through all the experiences shared here has been such a relief. The material participation test that keeps being mentioned throughout this thread finally clarifies everything. Since we're essentially acting as landlords who collect lease payments while the actual farmer makes all the planting, harvesting, and management decisions, we clearly don't meet the material participation threshold regardless of our tax filings. The insight from the financial aid professional about tax classification versus FAFSA classification serving different purposes was particularly enlightening. It explains why filing Schedule F doesn't automatically make it a farm business for financial aid purposes - the criteria are completely different. What really stands out is how consistent the advice has been from multiple people who've actually navigated this process successfully. When everyone from recent families to financial aid professionals points to the same material participation standard, you know you're getting reliable guidance. Thank you all for creating such an amazing resource and helping families like mine feel confident about these complex FAFSA decisions. This discussion has definitely convinced me that investment property classification is the right approach for our situation!

As a newcomer to this community, I can't thank everyone enough for this incredibly detailed and helpful discussion! I'm currently filling out my first FAFSA for my daughter and facing almost the exact same situation with 90 acres that we lease out for hay production. Like so many others here, I was completely overwhelmed trying to figure out whether to classify this as farm business or investment property, especially since we also file Schedule F with the IRS. Reading through all these real-world experiences has been such a game-changer. The material participation test that everyone keeps referencing finally made everything click for me - it's not about what tax forms you file, but about whether you're actually involved in the day-to-day farming operations. Since we just collect lease payments while our tenant handles all the cutting, baling, and equipment decisions, we're clearly not materially participating regardless of our Schedule F filing. The explanation from the financial aid professional about tax classification versus FAFSA classification serving different purposes was particularly eye-opening. It completely explains why the IRS treatment doesn't automatically determine the FAFSA classification. What really gives me confidence is seeing how consistent the advice has been from multiple families who've successfully navigated this process, plus hearing from someone who actually works in financial aid. When everyone points to the same material participation standard, you know you're getting solid guidance. Thank you all for creating such an invaluable resource for families trying to decode these complex FAFSA rules. This discussion has definitely convinced me that investment property classification is the right approach for our situation, and I'm so grateful to have found this supportive community during what felt like an impossible decision!