Hello,
I just took a job with a temporary relocation package. I decided to keep my existing home (not sell) and will be renting at the new location. I intend to return to my home after two years. I will probably spend 50% of my time living in each home during these two years. Will FAFSA view my old home as an “investment” if I don’t live in in at the time of FAFSA filing, even if I don’t rent it out? I’m a parent, not student. My current home has a ton of equity.
Thank you!
Where will your college age kids be living? In the rental…or in the old family home?
In other words…is the whole family moving to the new location…or just you?
If you rent your house, how can you be there half the time?
My college kid will be living in college dorm. I will be living the NEW home from July to December. I can rent out the old place for second half of the year, when I actually moved out. I don’t know yet.
Re: .is the whole family moving to the new location…or just you?
I don’t know yet what we should be doing. Since the kid is living in the dorm, it probably doesn’t matter. I’m just trying to figure out what to do in order for my old house not to jeopardize FA this year, while we are sorting this out.
Basically, my new job offered me to move close to work for two years, and then they will likely to move me back, if all the conditions are met. I’m planning to show my relo expenses on the tax report because the company is paying me a lump sum to cover the relo. The question is what to say on FAFSA about the old place, if I live there for 6 months during the FAFSA year. At this point I still have a lot of flexibility how to handle this and need to decide what to do. I was unemployed for 5 months during the FAFSA year, and if my old house equity becomes countable on FAFSA, I won’t be able to pay for the kiddo’s school next year. This year she got a grant based on income. The college she goes to doesn’t count primary residence equity.
FAFSA doesn’t use time at residence (except for time a child lived with parent). It uses your residence on the day of filing, so you could be a resident of California for one day and that’s your fafsa residence. It doesn’t usually matter at all. However, in your case if you rent out your house, it cannot be your residence. You can’t live there if you are renting it out, so yes, it would count as a rental.
If you don’t rent it and don’t move your residence, pay non-resident taxes in the state you are ‘visiting’, continue to have a presence in the state where the home is (DL, voting) that might work, but then you probably won’t be able to take the moving expenses as a tax deduction.
Is your family moving??? Or just you. Where will your college kid go in breaks
My family is just me and her. She will probably not even come home on breaks. So I have no clue how to report my old home on the FAFSA.
My ex and I both are on the title, but he moved out in 2015. When I field FAFSA this year, I reported my old (current) home as primary residence because my kiddo and I lived in it at the time of the filing.
Ok…when you do your taxes, will you be using this new home as your primary residence? Or your old one.
Will your college student be a member of your household and dependent for tax purposes?
Are you leaving the old house empty?
Honestly, it sounds like you are looking for a way for this first house NOT to be an asset…that has a lot of equity in it. If you want that house to,be your primary residence, you will need to LIVE in that house more than half the time. You will not be able to change your driver’s license, insurances, voting registration, and permanent mailing address for places.,…like the college.
Is that going to be the case? OR are you moving to a new place for a new job…and you are just hanging onto this first house…just in case…and hoping it won’t be an asset?
Hi @thumper1 what does OP have to live in that house for more than half the time?
hypothetically if a single parent owns a house, but the job requires the parent to travel more than half of the time, but the parent pays taxes listing the house as primary residence, does not change his/her driver license, can’t the parent list the house as his/her primary residence?
This parent is getting (and presumably taking) a relocation allowance from her new company. This parent isn’t TRAVELING half the time…this parent is MOVING to the new location.
Sure…if this were lodging this parent was taking because the job was in a neighboring state, and they were maintaining their primary residence in the first state…then fine.
But this parent is MOVING.
what if this parent is not taking the moving allowance?
I worked at NYC, my former boss, whose family lived in CT, rented an apartment in NJ and traveled to CT on weekends…many people did that…In this case, the OP said she will probably be spending 50% of her time in both places…
Residency for income tax purposes is usually based on the place where you reside more than half the time.
This OP is trying to figure out how NOT to have that first home as the primary residence. That might be possible IF the scenerio is as you describe it.
But that wasn’t the impression I got from the OP…otherwise…why would she have even MENTIONED the relocation allowance?
For all we know…this is five states away.
The OP needs to crunch some numbers. Insurance on a house where no one lives can be VERY costly per year. The OP will still be paying taxes, etc.
Is there really going to be a net gain by keeping this house? There might not be.
Hoping the OP comes back to clarify.
@annamom, I think residency is based on where you live not where you own property. If OP rents out her house it’s considered an income property, so I think the equity will be counted as well as the rental income.
I’m not clear. Are you planning to rent house one?
Residency isn’t determined by where you spend half your time but where you declare is your residence. Many people have beach houses and spend more time there, but their primary residence for voting and documents and putting their children in public school is elsewhere.
There are instructions for taking the moving allowances on the tax forms, and they have to do with distance from the old job and distance from the new job. If you move at the end of the year, it’s fine that you lived 11 months in the old state and 1 in the new state - you are now a resident of the new state. If you were to file FAFSA on Dec 31, you’d list that you were a resident of the new state.
OP could make this work to keep the old residence by not renting out the house and keeping it as her permanent residence, but then she might not be able to take the moving expenses on her taxes. She has to weigh all the options.
In some states it is very difficult to maintain home owner’s insurance on an empty house (a residual effect of 2008 and people walking away from homes when they were underwater on their mortgage.
I’d be calling my home owner’s insurance agent on Monday real quick before getting ahead of myself. It is fine to have an empty house when you are away temporarily… but a “permanently” empty house may become a huge financial liability with only moderate financial aid upside.
I think this is too complicated. You live in your original home. You are taking a temporary work assignment that puts you on the road so much that you arranged a second residence. But you reside in your original home.
I am not sure how you can rent your primary home for short terms but that might complicate things. If you need the money, it would make more sense to me to rent out the secondary residence that you are using temporarily for work.
I have been in a situation where I owned a condo and had my residence in one state. But I took a job in another country, spent some time traveling, worked out of state in the USA all in the same year such that I was virtually never home. Yet my home was my permanent residence and I owed state taxes. Just an example.
In any case, you should touch base with an accountant to make sure you file state taxes appropriately and he/she might shed brighter light on your question.