Depending on where in NY would affect taxes. Long Island or City Boros could be $12,000 or more. The whole post doesn’t add up. Parents have a large asset in their business.
$12,000? Tony Amherst $17,000+
Another thought…
For the schools…I would guess this would be exchanging one asset type (money in the bank) for another (home equity).
If the family really has $400,000 in a savings account…that WILL affect the family contribution at at all schools.
On the fafsa and Profile, the equity in a secondary piece of real estate will be fully assessed as an asset. So if the parents have $400,000 in savings…and borrow from relatives…not a mortgage…they will have $650,000 in equity in this rental property.
I think this student needs to look for merit aid and be sure she has some financial safeties on her list.
Money borrowed from any source to buy real estate, under contractual terms for repayment, is a mortgage. If the lenders are smart (maybe a big assumption, given the limited facts we know), they will make sure that they are lien holders in the legal sense until the debt is fully satisfied. In other words, it’s entirely possible that for financial aid purposes money borrowed from relatives to buy a property will be looked at no differently than money borrowed from a bank.