Primary residence to rental property minimizing gross income

[Kate Gofman]

Hi everyone,

I plan to rent my house which has been my primary residence for 5 years, and move in with my fiancé .

I am a single mother with 15 year old twin daughters. I don't have any savings.

Of course, I worry about college costs in 3 years when my girls finish high school. My fiancé and I are not marrying now because he has good income and I will not get any college financial aid if I marry him. He is a widower and has his own two sons in college, so I wouldn't want to use his money for my children's college education

I have some unclear financial matters with this rental plan and need some advice.

1. The best option for me, in terms of getting generous private college financial aid, not to have any home equity at all. I could transfer deed and title to my fiancé but I have a $240,000 mortgage on the house, which is not transferable.
I know it's not a good idea because the mortgage company can find out about it. Besides, for college aid, it may look strange that I pay mortgage but don't own the house.

My fiancé could also buy the house from me, but he doesn't have enough money for a 20% down payment. He just bought his primary residence where we will live together.

2. Another option for me is to remain the owner of the house and rent it.
First, it will decrease private college financial aid because of the home equity. Second, it will increase my gross income and my ex-husband can request to have child support recalculated, according to our divorce agreement. I don't want that either.

3. My friend suggested opening LLC for renting my house. She says this way I can regulate my gross income increase myself at the level that does not cause child support recalculation.
I assume, this LLC option will require including LLC name on the house title, and refinancing the house.

I am very new to all this and pretty nervous because I don't know what to do.
------
I will appreciate any professional advice on my situation.

[Marian Smith]

I hate to be a debbie downer, but you appear to be bringing 250k equity into the marriage. Do not transfer title to someone you are not married to. Let me rephrase. Do NOT give your house to anyone. Do not let your child ‘s college cost affect your retirement prospects...you do not know what the future holds. Do what is best for you. Rent your house, keep it as a separate entity from the marital pool of assets and share the rental profits with your intended. Or if you want to sell your house and apply the equity to your husbands house with you on the title with 250k of the equity (a lawyer can draw it up...to keep it separate). Or sell and bank the money. Keep it separate. (If your intended has a problem with that, have a problem with him having a problem with that. He will have all your earnings going forward together. Women need financial security.) Have your child Apply for financial aid and if she is turned down have your child take out loans and use the rental income to pay her living expenses. Do what is best FOR YOU. You do not have the TIME your child has to save to retire.