No. A mobile home in and of itself is never real property. Real property means land and the permanent buildings on land. FAFSA does not defer to state law; it has consistent definitions across all political boundaries so that the rules apply as equally as possible to all applicants. OP is not talking about buying and owning real property.
Is this a FAFSA-only college?
I think you might need to call the school FA folks. The problem is: you don’t want the college to see this trailer as an asset, whether as a vehicle or an investment.
The CSS includes a mobile home in the definition of a home. A NYT blog says this: “The Fafsa excludes the net worth of the principal place of residence, but not any vacation homes or other real estate. The purpose of the second home may be admirable, but colleges do not make exceptions in such circumstances, since the second home could just as easily be sold for the owner’s benefit.”
It doesn’t matter, as FAFSA disregards vehicles (other than collectibles/vehicles held as investments) and the typical mobile home is not an investment (you don’t purchase it expecting that it will increase in value over time).
OP is borrowing to buy the mobile home so equity would be less than $30k and possibly total assets are under the allowance.
Yes, possibly assets under the total allowance. But none of us can confirm this for OP. And we know that even folks with real property/second homes that are under water, are still sometimes stuck.
BP said, “I wouldn’t consider a mobile home/trailer, in and of itself, to be an investment.” I agree. (It’s more a convenience for her son.) But the issue is how this particular college will view it.
If it is a vehicle in Montana, perhaps that’s that. But the rent is technically income. This is a case where you don’t want to find out later that the college can shade a definition. I’d be tempted to find a way to ask the school- we have an option to finance a trailer for his housing. Would this count as an asset? We would have no equity.
That’s really all I wanted to say.
The OP only said she was buying a mobile home. We have no idea if it is in a park, if it is on land that she’s also obtaining, if it is on a sales lot and she needs to move it to some other property. If it is on a lot it could very well be a real property sale with the bigger part of the value being the home and not the lot. Some mobile home parks are condos and the home owner owns the space like a condo with the common areas owned by the association. In that case, the home can be real property and the condo is deeded. There are even timeshare parks that may be deeded or just points, but more often those are for more mobile mobile homes, like RVs or Air Streams.
We don’t know. The OP could think she’s buying a vehicle, but if the prior owner had it changed to real property, she’d get a deed and it may be the seller just assumed the OP knew that the trailer was converted to real property. Just because a tongue and wheels are cut off doesn’t mean they can’t be reattached (some parks require them to be cut off, and they are re-welded). It does matter if she gets a title or a deed. State law. It can also be a modular home built on a trailer base. That’s not a mobile home, never was a vehicle, but looks the same as a mobile home and can be ‘set’ in some mobile home parks. I think the new ‘tiny houses’ fall into that category but I’ve not transferred any of those so I’m not sure.
I’ve seen them titled and deeded just about every way you can think of, and then a new one will come along and surprise me.
Where will this be “parked”? Friend owns one, and it’s in a mobile home park.,in addition to her loan payment, she also has a monthly homeowners association fee, and rent for the land on which its planted.
It is already on a lot in a mobile home park so we will need to pay rent on the lot. This is a FAFSA only college, so they are going to take whatever FAFSA says. I see we need to ask the owner whether this is a title or deed today. My impression from researching Montana laws and other comments on the web now is that the only reason people petition to have it changed to real property is to get loans. Almost all the trailers we have looked at make sure you know that they want cash up front and bank loans will not be happening so I’m thinking most people aren’t bothering changing them to real property. We’ll investigate further. To minimize the look that the rent is income we may just have to make all the guys pay their portion of lot rent, utilities etc so that all we see is the little bit to cover the loan and just count that part as income.
You have all been very helpful!
How far is the mobile home park from the school? Is there parking for 3 cars included?
The park is maybe 3/4 of a mile, bus route goes right past, and parking for 3 cars. It does feel like we’ve thought through almost everything!
Let’s assume that there is a state out there that requires a real property deed to prove ownership of a mobile home, even a mobile home that is not permanently affixed to any real property or at least any real property that is owned by the owner of the mobile home. So, in the eyes of the state, the mobile home is treated just like raw land, even though that’s clearly a legal fiction. But, that’s just how the law works in this particular state. Guess what? For FAFSA, it doesn’t matter. The FAFSA question that asks about “net worth of investments, including real estate,” would not be answered with a value that includes the mobile home, because the mobile home in and of itself is clearly not real property, despite how this particular state labels it, and it is not personal investment property, like gold or art work. That’s what I mean when I say that for FAFSA purposes, it doesn’t matter what the state law is.
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will just cover payment, utilities, insurance, and a tiny cushion for fridges that die etc., so it will not really be much income.
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I’m not sure how this is handled since some are saying that it’s not a “second home” that’s being rented out.
Can they simply subtract the rent payments from the mortgage, utilities, etc, like real property? Would they use the same forms that are used for rental property?
State laws may be one thing, but FAFSA is a fed form. What do the Feds think?
It’s possible to receive rent payments for a property that’s not your primary residence and yet not own any real property except your primary residence (or not own any real property at all). Those who sublease a space do it all the time. Collecting rent simply means that you have a controlling interest in the property. You may own the property outright, or you may control it as a lessee. Either way, rent you receive from someone else is income to you.
FAFSA is interested in real property other than the primary residence that can be sold, and that can therefore help to pay college expenses. FAFSA isn’t interested in personal property that might be sold for the same purpose, other than personal property that qualifies as a bona fide investment.
^^
I understand. But it seems odd that someone could buy - say - 5 mobile homes, stick them on a rented lot, rent out all the mobile homes, and only the income counts…minus the mortgages and other costs.
BP, we see these issues all the time-eg, when someone inherits part of a property that generates money of some sort that can (or might) be treated as income. The holder may be one of several family members, the property may be locked up for a while, the value can be negligible, under water or whatever, but it can be treated as an asset by some colleges.
The point here is that none of us can confirm the right way to decide this. Maybe kelsmom could. But when m2ck isn’t sure, with all her knowledge, that says something.
I could see that renting a tractor to another farmer might be ignored (I don’t want to say “hidden.”) (Technically, unless the other declares it a business expense.) Renting a room for cash might be ignored. But holding a residential trailer in your name and sharing it to pay expenses-? If the college considers it a domicile, then what?
@kelsmom Can you chime in?
I’m thinking of all sorts of possibilities. Some people buy mobile homes and rent lake property to plop them on to use as vaca homes…and to rent out as well. Do those not count?
If all is needed for these not to count is not owning the property where it sits, that is a big ole loophole. Have grandparents or siblings or another adult child own the land, and you “rent” the lot for $1 per year that you plop these on and rent them out.
Of course, and that makes sense, because in the example you give above the person is a fractional owner of real property, and real property (other than primary residence) is reported as an asset on FAFSA. Note, however, that if the property is underwater (the amount owed on it is more than the fair market value), than no asset is reported. In OP’s case here, there is no contemplation of buying real property, only personal property that is not an investment asset. These are two very different concepts, and FAFSA treats each type of property (non-primary residence real property, and non-investment personal property) differently.
It seems to me that people are making this more difficult than it really is. Let’s try to simplify. If OP buys a mobile home and puts it on a rented pad, on which line of FAFSA would that mobile home (non-investment personal property) get reported as an asset, if indeed it needs to be reported?
Of its a vehicle…it is not reported on the FAFSA…at all.
The rent would need to be reported as income.
It is a loophole for FAFSA. There are lots of loopholes - boats can cost $100k, motorcycles, snowmobiles, RVs. If you buy a timeshare with a deed, it is real estate and must be reported. If you buy points in a timeshare corporation but don’t have a deed? You lose the benefits of real property.
To the OP…what will you do with this mobile home if your child decides to leave college, or transfer to a different school?
To be honest, unless you want to deal,with the ownership of this…regardless of financial aid implications…don’t buy it.