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!