Anonymous
12/03/2011 07:14
Subject: FA shouldn't go to people with 1 million dollar houses
I was recently told by a friend who lives in a $$$$ home and mom doesn't work that they get still financial aid for their religious based school because the school just wants to make it easy for kids to have that religious education. I guess the schools have enough $$ to do it. Amazed me..
Anonymous
12/03/2011 01:24
Subject: FA shouldn't go to people with 1 million dollar houses
The firefighter claimed his house was worth $1M not that it was assessed at $1MM so they should be able to sell and make a sizeable profit as I think they originally paid $300k for their home. I assume they have not refianced over the years as they bragged about living modestly and having a mortgage they could afford.
Private school is a luxury and like any other luxury not everyone can afford it. I do like that they offer aid to truly needy families and I'm happy to have police officer, the military, fire fighter and many other middle class, poor and upper class families attend. A needy family or middle class family does not own a $1M asset, if they do they do not deserve financial aid.
If I'm expected to cash out my kids college funds, mutuals or my savings then people should have to cash out their homes. I could cash all these things out and put it into a mortgage and it would count in my favor. It would increase my likelihood of getting aid. I'm rewarded for spending and making my financial situation worse although my assets have not changed. Some assets are more liquid then others but the day I cash in the value of my assets are essentially the same. This is the problem with financial aid the calculation is completely wrong.
What is the % of Americans with a networth over $1M? Personally if I were middle class given the real estate market I would sell and cash out anyway. I would not cash out to put my kid in private school but I would for future financial security. Getting aid from a school would make me wait until my kid graduate and then cash out. Hopefully the market will still be up and I would have saved a ton on tuition.
Private school is a luxury and like any other luxury not everyone can afford it. I do like that they offer aid to truly needy families and I'm happy to have police officer, the military, fire fighter and many other middle class, poor and upper class families attend. A needy family or middle class family does not own a $1M asset, if they do they do not deserve financial aid.
If I'm expected to cash out my kids college funds, mutuals or my savings then people should have to cash out their homes. I could cash all these things out and put it into a mortgage and it would count in my favor. It would increase my likelihood of getting aid. I'm rewarded for spending and making my financial situation worse although my assets have not changed. Some assets are more liquid then others but the day I cash in the value of my assets are essentially the same. This is the problem with financial aid the calculation is completely wrong.
What is the % of Americans with a networth over $1M? Personally if I were middle class given the real estate market I would sell and cash out anyway. I would not cash out to put my kid in private school but I would for future financial security. Getting aid from a school would make me wait until my kid graduate and then cash out. Hopefully the market will still be up and I would have saved a ton on tuition.
Anonymous
12/02/2011 09:11
Subject: Re:FA shouldn't go to people with 1 million dollar houses
Anonymous wrote:Anonymous wrote:
If I were to sell my $1M house - buy a $500 home 20% down $400 mortgage with I can't afford so maybe $300 mortgage - is that okay - use some of the equity to buy the house down to my original mortgage - did I get your approval for that? So now I have $400K in equity which 50% goes to the IRS so now I have $200K in equity minus closing costs for buying and selling, - which is about 2 percent of a million which is $20,000 + $10,000 in points and surveying and loan origination, etc not to mention the cost of moving, time off of work so I have whopping $170,000.
So I just went from $700K in equity in my house to $200K in equity and $170K. I have just thrown away over $300K.
Why would 50% of the $400 K in equity go to the IRS? Aren't capital gains on home sales are exempt up to $500k? Plus, I have bought and sold houses without using a real estate agent, so that saves money. Plus, closing costs and points can be financed into the new mortgage.
Yes, each person is entitled to 250K tax free every 5 years, assuming they've been living in the house a majority of the time. Chances are they would be able to keep all 400K.
Anonymous
12/02/2011 08:45
Subject: FA shouldn't go to people with 1 million dollar houses
Each school or college considers "lifestyle choices" differently. Home equity is a variable for schools and colleges. By variable I don't mean in a formula- it's subjective.
The only way the 300,000 house now worth over 1m seems realistic is if it was owned prior to 1990.
So whoever has owned property under this scenario was either fortunate enough to inherit money, used family given assets, was given the house, married older person who owned the house, or experienced early success.
I assume there currently could be no mortgage.
Anonymous
12/02/2011 07:59
Subject: FA shouldn't go to people with 1 million dollar houses
Anonymous wrote:Your understanding of section 121 of the Internal Revenue Code is quite outdated. The law was changed and there is no once-in-a-life-time restriction. From the IRS website (quote from IRS press release):
IR-2002-142, Dec. 23, 2002
"WASHINGTON – The Internal Revenue Service today issued guidance in the form of both final and temporary regulations related to excluding gain on the sale of a principal residence. A 1997 law substituted an exclusion of up to $250,000 ($500,000 for a married couple filing jointly) for the old “replacement residence” rules. Unlike a previous once-in-a-lifetime exclusion for senior citizens, the new exclusion may be claimed repeatedly, but usually only once every two years."
So the PP who did the math - all that math is totally off. And, in fact, even if there is only $170 left - well, for 1 child that takes you through 4-5 years of private school tuition, without taking financial aid away from those who do need it.
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Nice try - don't you have a Christmas party to plan. You have no clue.
Anonymous
12/01/2011 18:52
Subject: FA shouldn't go to people with 1 million dollar houses
Your understanding of section 121 of the Internal Revenue Code is quite outdated. The law was changed and there is no once-in-a-life-time restriction. From the IRS website (quote from IRS press release):
IR-2002-142, Dec. 23, 2002
"WASHINGTON – The Internal Revenue Service today issued guidance in the form of both final and temporary regulations related to excluding gain on the sale of a principal residence. A 1997 law substituted an exclusion of up to $250,000 ($500,000 for a married couple filing jointly) for the old “replacement residence” rules. Unlike a previous once-in-a-lifetime exclusion for senior citizens, the new exclusion may be claimed repeatedly, but usually only once every two years."
So the PP who did the math - all that math is totally off. And, in fact, even if there is only $170 left - well, for 1 child that takes you through 4-5 years of private school tuition, without taking financial aid away from those who do need it.
IR-2002-142, Dec. 23, 2002
"WASHINGTON – The Internal Revenue Service today issued guidance in the form of both final and temporary regulations related to excluding gain on the sale of a principal residence. A 1997 law substituted an exclusion of up to $250,000 ($500,000 for a married couple filing jointly) for the old “replacement residence” rules. Unlike a previous once-in-a-lifetime exclusion for senior citizens, the new exclusion may be claimed repeatedly, but usually only once every two years."
So the PP who did the math - all that math is totally off. And, in fact, even if there is only $170 left - well, for 1 child that takes you through 4-5 years of private school tuition, without taking financial aid away from those who do need it.
Anonymous
12/01/2011 17:41
Subject: Re:FA shouldn't go to people with 1 million dollar houses
Anonymous wrote:Anonymous wrote:
If I were to sell my $1M house - buy a $500 home 20% down $400 mortgage with I can't afford so maybe $300 mortgage - is that okay - use some of the equity to buy the house down to my original mortgage - did I get your approval for that? So now I have $400K in equity which 50% goes to the IRS so now I have $200K in equity minus closing costs for buying and selling, - which is about 2 percent of a million which is $20,000 + $10,000 in points and surveying and loan origination, etc not to mention the cost of moving, time off of work so I have whopping $170,000.
So I just went from $700K in equity in my house to $200K in equity and $170K. I have just thrown away over $300K.
Why would 50% of the $400 K in equity go to the IRS? Aren't capital gains on home sales are exempt up to $500k? Plus, I have bought and sold houses without using a real estate agent, so that saves money. Plus, closing costs and points can be financed into the new mortgage.
Capital Gains are only exempt 1 time in a life time and that is usually saved until retirement. The cost saving for selling my own house was a wash because you advised me to roll my points into my mortgage which had to be paid down to $300K so I could afford the payments. Wow! You should go back to volunteering in the classroom because you really have no clue about finances.
Anonymous
12/01/2011 16:21
Subject: Re:FA shouldn't go to people with 1 million dollar houses
Anonymous wrote:
If I were to sell my $1M house - buy a $500 home 20% down $400 mortgage with I can't afford so maybe $300 mortgage - is that okay - use some of the equity to buy the house down to my original mortgage - did I get your approval for that? So now I have $400K in equity which 50% goes to the IRS so now I have $200K in equity minus closing costs for buying and selling, - which is about 2 percent of a million which is $20,000 + $10,000 in points and surveying and loan origination, etc not to mention the cost of moving, time off of work so I have whopping $170,000.
So I just went from $700K in equity in my house to $200K in equity and $170K. I have just thrown away over $300K.
Why would 50% of the $400 K in equity go to the IRS? Aren't capital gains on home sales are exempt up to $500k? Plus, I have bought and sold houses without using a real estate agent, so that saves money. Plus, closing costs and points can be financed into the new mortgage.
Anonymous
12/01/2011 15:10
Subject: Re:FA shouldn't go to people with 1 million dollar houses
LOL!!! I could, but how does that benefit me – besides having money in the bank earning next to nothing for tuition. First PP would want me to take out more debt on my house and now you would want me to sell my house for whatever I can get, take a huge capital gains hit and pay cash for a new one (thereby losing all tax benefits that come with mortgage interest). All this while keeping in mind that the house I originally bought was $300K – which was a reasonable amount that I could afford.
Why don’t you just stop contributing to the FA fund? That would be a lot easier than trying to tell people how to manage their own finances. Like I said before, I put 2 kids through private school without a dime of FA, made sacrifices to do it and I even contributed in fund raising drives every year. But I would never support a system that required someone to sell or refinance their house to attend DC’s school.
Why don’t you just stop contributing to the FA fund? That would be a lot easier than trying to tell people how to manage their own finances. Like I said before, I put 2 kids through private school without a dime of FA, made sacrifices to do it and I even contributed in fund raising drives every year. But I would never support a system that required someone to sell or refinance their house to attend DC’s school.
Anonymous
12/01/2011 13:58
Subject: FA shouldn't go to people with 1 million dollar houses
Anonymous wrote:Anonymous wrote:Sorry a home can be an asset just like anything else and yes someone with a million dollar home should be paying their own way firefighter or not. Sorry. I guess I'm selfish but this is the equivalent of someone pulling their money out of other assets and putting it completely into their home. Is it okay if I have a 3 million home that I can barely make the mortgage payment? Do I still desire aid? This is the problem with determining there has to be an income and asset cut-off if not it rewards spenders and punishes savers. In this case, just like in college you are usually expected to utilize the equity in your home because it is an asset. Of course this is one of the issues of the housing crisis. If private is worth then people will find a way to afford it. Also I would rather put the aid to the truly needed. Also, what prevents the firefighter the day after the last year of private school aid is awarded from cashing in an enjoying his equity? Whether the fire fighter is trying to or not this is another way to game the system which why it really needs to be changed.
PP here. In this scenario, it only rewards spenders if they paid $1 Million for the house. I think you and I have a disconnect on what a "million dollar home" is and what taking equity is. Just because some mortgage broker or tax assesor says my home is "worth" $1 million does not make it so - especially if I could not sell it for that. Besides, just because I have a "million dollar home" does not mean I have a million dollar mortgage or can afford one. My mortgage could reflect what I actually paid for the house - $300K. Cashing in an IRA is NOT the same as borrowing against your house. "Cashing in on equity" means borrowing against the equity in your house and the equity in your house is not hard money. That is all I am saying.
Well, having a kid in college, I can tell you that I was not "expected" to pull the equity out of my house in the FAFSA process. I was given a "parent contribution" number and how I got there was my business.
Couldn't you just sell the house, buy one for $450K, pay the capital gains and bank the remainder for tuition.
Anonymous
12/01/2011 12:32
Subject: FA shouldn't go to people with 1 million dollar houses
Anonymous wrote:Sorry a home can be an asset just like anything else and yes someone with a million dollar home should be paying their own way firefighter or not. Sorry. I guess I'm selfish but this is the equivalent of someone pulling their money out of other assets and putting it completely into their home. Is it okay if I have a 3 million home that I can barely make the mortgage payment? Do I still desire aid? This is the problem with determining there has to be an income and asset cut-off if not it rewards spenders and punishes savers. In this case, just like in college you are usually expected to utilize the equity in your home because it is an asset. Of course this is one of the issues of the housing crisis. If private is worth then people will find a way to afford it. Also I would rather put the aid to the truly needed. Also, what prevents the firefighter the day after the last year of private school aid is awarded from cashing in an enjoying his equity? Whether the fire fighter is trying to or not this is another way to game the system which why it really needs to be changed.
PP here. In this scenario, it only rewards spenders if they paid $1 Million for the house. I think you and I have a disconnect on what a "million dollar home" is and what taking equity is. Just because some mortgage broker or tax assesor says my home is "worth" $1 million does not make it so - especially if I could not sell it for that. Besides, just because I have a "million dollar home" does not mean I have a million dollar mortgage or can afford one. My mortgage could reflect what I actually paid for the house - $300K. Cashing in an IRA is NOT the same as borrowing against your house. "Cashing in on equity" means borrowing against the equity in your house and the equity in your house is not hard money. That is all I am saying.
Well, having a kid in college, I can tell you that I was not "expected" to pull the equity out of my house in the FAFSA process. I was given a "parent contribution" number and how I got there was my business.
Anonymous
12/01/2011 12:20
Subject: FA shouldn't go to people with 1 million dollar houses
Anonymous wrote:Sorry a home can be an asset just like anything else and yes someone with a million dollar home should be paying their own way firefighter or not. Sorry. I guess I'm selfish but this is the equivalent of someone pulling their money out of other assets and putting it completely into their home. Is it okay if I have a 3 million home that I can barely make the mortgage payment? Do I still desire aid? This is the problem with determining there has to be an income and asset cut-off if not it rewards spenders and punishes savers. In this case, just like in college you are usually expected to utilize the equity in your home because it is an asset. Of course this is one of the issues of the housing crisis. If private is worth then people will find a way to afford it. Also I would rather put the aid to the truly needed. Also, what prevents the firefighter the day after the last year of private school aid is awarded from cashing in an enjoying his equity? Whether the fire fighter is trying to or not this is another way to game the system which why it really needs to be changed.
You know you can't just cash equity out of home without major penalties.
The idea shows you lack of knowledge of basic economics.
Anonymous
12/01/2011 12:14
Subject: Re:FA shouldn't go to people with 1 million dollar houses
If I were to sell my $1M house - buy a $500 home 20% down $400 mortgage with I can't afford so maybe $300 mortgage - is that okay - use some of the equity to buy the house down to my original mortgage - did I get your approval for that? So now I have $400K in equity which 50% goes to the IRS so now I have $200K in equity minus closing costs for buying and selling, - which is about 2 percent of a million which is $20,000 + $10,000 in points and surveying and loan origination, etc not to mention the cost of moving, time off of work so I have whopping $170,000.
So I just went from $700K in equity in my house to $200K in equity and $170K. I have just thrown away over $300K.
Anonymous
12/01/2011 11:38
Subject: FA shouldn't go to people with 1 million dollar houses
Sorry a home can be an asset just like anything else and yes someone with a million dollar home should be paying their own way firefighter or not. Sorry. I guess I'm selfish but this is the equivalent of someone pulling their money out of other assets and putting it completely into their home. Is it okay if I have a 3 million home that I can barely make the mortgage payment? Do I still desire aid? This is the problem with determining there has to be an income and asset cut-off if not it rewards spenders and punishes savers. In this case, just like in college you are usually expected to utilize the equity in your home because it is an asset. Of course this is one of the issues of the housing crisis. If private is worth then people will find a way to afford it. Also I would rather put the aid to the truly needed. Also, what prevents the firefighter the day after the last year of private school aid is awarded from cashing in an enjoying his equity? Whether the fire fighter is trying to or not this is another way to game the system which why it really needs to be changed.
Anonymous
12/01/2011 10:28
Subject: FA shouldn't go to people with 1 million dollar houses
Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:Well I am the person that pulls your family out of burning buildings and walked up the towers while your husband walked down. I might need a few thousand to send my kids to our school. Yes and my house was appraised close to $1M a few years ago but I could never actually afford that. I say if you don't like it send your kids to public. Most people we know at private aren't as selfish as you.
Nope, I'm happy to support the kids of firefighters and other civil servants who do vital, lower-than-it-ought-to-be-paid work. I'm not talking about you and you probably know it. I'm talking (though I agree it might not have been clear from my earlier post) about the people who live large but find ways to hide income or assets to get FA they don't really need or shouldn't need if they made better financial choices.
p.s. Thank you for your service. My brother is a firefighter and I'm grateful to him and all the other firest responders who do what they do (and I get REALLY pissed at all the SAHMs who say it is the HARDEST job in the world, but that's another rant).
Well I was addressing the $1M house comment. People think we must have family money or something. Just bought at a good time and save and love Ocean City.
No need to be snippy about what people do for a living. If you're a firefighter, that's great. No reason to discuss how you "walk up" while others "walk down." And I don't think there's much relationship between your job and whether people should be expected to pull equity out of their homes to pay for things they are trying to afford, like private school.
I'm sure you don't - don't trip on your way out.
PP here. You have no idea how my husband or I spend our time. Please tell me how your job choice should relate to whether you or others should be expected to pull equity out of your home to pay for things you are trying to afford. Really, what's the connection? That you help people for a living so you shouldn't have to tap into certain assets to afford school? What about the other firefighter climbing up those stairs to save the rest of the universe? What if their assets are in stocks or a mutual fund that increased in value instead of a home? Should your co-worker receive less financial aid than you do just because his/her assets are in a different place (mutual fund instead of a home)? What the heck does your being a fire fighter have to do with that? And thanks so much for your concern, I'll be sure not to trip. All you're showing is that people in all professions can be self-absorbed and act holier-than-though.
Not the PP, but it does bear some relation. How does one “tap into the equity” of their home? They BORROW against it. That is far different than selling their mutual funds or cashing in an IRA. They are taking out a bigger mortgage in order to get cash now. Well, guess what. The NEW mortgage with the higher note still has to be paid every month. So you are saying that the firefighter with a limited salary should have to take out a bigger mortgage and go into more debt to afford private school. Like I said, asking someone to cut back on vacations and to drive reasonably priced cars is a GIVEN – we 100% agree on that. But asking someone to go into more debt on appreciated equity is a reach. That is NOT a prudent financial decision.