I thought I read about a month ago that a 20% discount from a Zillow price was allowed to reflect market value. It was based on an IRS reg allowing the market value to be discounted 20% for a fire sale. My question is - is this true and can it be applied both on your home as well as investment property or did I just dream this up.
I found my answer and it is a yes, but not for your primary residence. It is for second homes and rental properties. You can decrease the market value by 20% reflecting a quick sale. This answer was contained in the thread Rental Property on tab 53 (today). It referenced the source:
http://www.oregonlive.com/finance/index.ssf/2012/02/fear_the_fafsa_here_are_five_m.html
Personally, I wouldn’t trust that information unless it came from or was confirmed by someone within the Department of Education. But that’s just me. It’s not like the FAFSA people have the time or resources to run around checking everyone’s reported real estate values. They mostly have to rely on students and parents doing honest reporting.