FAFSA investment section: How to report rental property in another state?
I'm completely stuck on the investment section of the FAFSA for 2025-26. It's asking for "current net worth of investments including real estate" and we own a rental house in Colorado while we live in Texas. Do I put what we currently owe on the mortgage or what the property is actually worth? Or is it the equity (value minus what we owe)? The instructions aren't clear at all! I'm worried about getting flagged for verification if I put the wrong number. The house is worth about $425,000 but we still owe $293,000 on it. This is my daughter's first year applying and I don't want to mess this up for her.
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Daniel Washington
You need to report the NET WORTH of the rental property, which is the current market value minus what you owe on it. So in your case, that would be $425,000 - $293,000 = $132,000. The FAFSA is looking for your equity in the property. Make sure you DON'T include your primary home where you live in Texas - that's excluded from FAFSA reporting. Only the rental property counts as an investment.
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Lauren Zeb
•Thank you! That makes so much more sense. So we report the $132k as the investment value. Is there anywhere else I need to report the rental income we receive from the property, or is that already captured in our tax return information that gets pulled in?
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Aurora Lacasse
its the value minus wht u owe, so ur equity basically. thats what they wanna know
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Lauren Zeb
•Thanks for confirming! I was overthinking this.
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Anthony Young
To be completely accurate for FAFSA purposes, you report the net worth of the rental property (market value minus debt). However, you should also know that investment real estate is assessed at a much lower rate in the SAI formula than cash savings would be. A percentage of your assets (including this rental property equity) will be protected by the Asset Protection Allowance based on the age of the oldest parent, and then only about 5.64% of the remaining parent assets are counted in the calculation. Your rental income should already be captured in your AGI from your tax return that gets pulled in through the FAFSA.
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Lauren Zeb
•Oh that's really helpful to know! I was afraid they'd count the full $132k against us. The Asset Protection Allowance makes me feel better. My husband is 52, does that factor into how much is protected?
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Anthony Young
•Yes, the Asset Protection Allowance is based on the age of the oldest parent. For a 52-year-old parent, the protection is around $9,400-$10,500 depending on your family situation. So after that protection, only 5.64% of the remaining parent assets count toward the SAI. This means only about $6,900 of your rental property equity would actually impact your daughter's aid eligibility (and that's assuming you have no other assets that would use up the protection allowance first).
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Charlotte White
I made this EXACT same mistake last year and put the full property value down without subtracting what we owed!! We got selected for verification and had to provide all kinds of documentation about our rental property. It was a NIGHTMARE dealing with FSA over the phone - I spent HOURS on hold just to get disconnected. Total nightmare.
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Admin_Masters
•I had the same issue trying to reach anyone at Federal Student Aid about verification. After waiting on hold for 3+ hours, I finally found this service called Claimyr that got me through to an agent in about 20 minutes. Saved me so much time and frustration. Their website is claimyr.com and they have a video showing how it works: https://youtu.be/TbC8dZQWYNQ. Completely worth it when you're dealing with verification issues or complicated questions about investment properties that the regular FAQs don't cover.
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Matthew Sanchez
Wait I'm confused, do you put what you can SELL it for or what the county TAX ASSESSMENT says it's worth?? Those are totally different numbers!!! The market value where our rental is is crazy inflated right now.
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Daniel Washington
•You should use the current market value (what you could reasonably sell it for), not the tax assessment. Tax assessments are often lower than actual market value and may not be updated frequently. If you're not sure about the current market value, you could check recent comparable sales in the area or even get a quick estimate from a real estate website like Zillow or Redfin as a starting point.
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Ella Thompson
When I did mine I just put the equity amount (value minus mortgage) and we didn't have any issues. But I also reported all the rental income on our taxes so it all matched up when they pulled our tax data.
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Lauren Zeb
•That's reassuring to hear. Yes, we definitely report all our rental income on our taxes, so hopefully everything will match up properly when they pull our tax data.
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Aurora Lacasse
btw make sure u dont include ur primary house where u actually live! only the rental counts
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Lauren Zeb
•Got it! Yeah, I realize now the home we live in doesn't count on FAFSA. Just the rental property.
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JacksonHarris
I had an issue kind of like this. My parents have a timeshare in Florida and I didn't know if that counted as real estate for FAFSA. The financial aid office at my college told me yes, it does count as an investment, but they wouldn't tell me how to value it since timeshares are weird. Ended up just using what they paid for it which was probably wrong lol.
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Anthony Young
•Timeshares are indeed considered investments for FAFSA purposes, but valuing them can be tricky. Generally, you should use the resale value (what you could sell it for now), not what was originally paid, as timeshares often depreciate significantly. For anyone with timeshares, checking recent resale listings for similar units in the same resort is the best approach for determining current value.
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Charlotte White
THE WHOLE SYSTEM IS DESIGNED TO CONFUSE US!!! I swear they make these questions vague on purpose to trip parents up so they can deny aid. Why can't they just ASK CLEARLY what they want to know?????
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Ella Thompson
•I feel this so much. When we were filling out my son's FAFSA I literally had to google every other question. The explanations they provide are like they're written by lawyers, not for regular people.
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Yuki Watanabe
I went through this same confusion last year with our rental property in Arizona! Just to add to what everyone else has said - make sure you have documentation ready in case you get selected for verification. I kept our most recent mortgage statement, property tax records, and a recent property value estimate from our real estate agent. The key thing I learned is to be consistent - if you use Zillow for the market value estimate, make a note of that and the date you checked it. The financial aid office at my daughter's school said they just want to see that you made a reasonable effort to determine fair market value. And yes, definitely report the net worth (equity) not the full property value!
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