Selling a House?

sblake7
Wed, 12 Apr 2006 18:29:00 +0000

If your parents have lived in the house for at least two of the last five years, they can exclude from income up to 500K in capital gains on the sale. So that doesn’t get reported as INCOME on the 1040, nor does it show up as INCOME on the FAFSA or Profile.

BUT-- if they don’t reivnest the proceeds into another home or some other non-liquid investment, you’ve still got a problem. That’s because if they sell their house and plop, say, 200K in a CD or savings account, it gets reported as an ASSET on FAFSA and Profile, and will severely hurt your chances of getting financial aid (after all, if you’ve got 200K sitting in the bank, why should a college or the government offer you financial aid?).

As far as foreign investments-- if they are in liquid form (checking, savings, stocks, bonds, CD’s, etc.) they are an asset that are avalable to help pay for college, no different than an investment in the US. If it’s a property that’s not the primary residence, as far as I know, it gets treated no different than a second property located in the US.