432-3 REAL OR PERSONAL PROPERTY

432-3 REAL OR PERSONAL PROPERTY

432-3 A. PROPERTY NECESSARY FOR SELF-SUPPORT

Certain property may be either totally or partially excluded from resources if it is necessary for self-support. Property excluded under this provision generally falls into the three categories explained below.

To qualify for this exclusion, the property must be in current use in the type of activity that qualifies it as necessary for self-support.

Nonuse exception. Property that is not in current use may continue to be excluded as necessary for self-support only if it has been in use, and there is a reasonable expectation that the use will resume.

Resumption of use must be expected within 12 months of last use.

This 12-month period can be extended for an additional 12 months if nonuse is due to a temporarily disabling condition. For this extension to apply, there must be a reasonable expectation that use will resume within the additional 12-month period.

1. Property excluded regardless of value

a. Property used in a trade or business.

All property used in a trade or business is excluded as a resource. A trade or business is a self-employment activity that is designed to produce income. (Refer to section 441-1D for the definition of self-employment.) The liquid assets of a trade or business are also totally excluded.

b. Property that represents governmental authority.

Any property that represents governmental authority to engage in an income-producing activity is excluded as a resource. This type of property includes Limited Entry Fishing Permits. A Limited Entry Permit that is not being used in an income-producing activity must be treated as personal property and its equity value counted as a resource, unless there is a reasonable expectation that use will resume within 12 months. (See nonuse exception provisions in this section above.)

Note: A Limited Entry Fishing Permit that Commercial Fisheries Entry Commission ( CFEC ) has classified as non-transferable has no value. These permits are valid for the permit holder’s lifetime, as long as they are renewed each year, but they cannot be transferred or sold. (See APA MS 430-4 A )

c. Personal property used by an employee for work.

Personal property used by an employee for work is excluded from resources. Excluded items include tools, safety equipment, uniforms, etc.

2. Nonbusiness property used for subsistence excluded up to $6000 equity regardless of rate of return

Exclude from resources up to $6000 of the equity value of nonbusiness property that is used to produce goods or services for home consumption.

This type of property includes land used to grow produce for home consumption, a boat used to subsistence hunt and fish, and livestock or tools used to produce items for home consumption. A Limited Entry Fishing Permit may also be excluded up to $6000 of its equity value under this provision if the permit is used to access a fishery for subsistence use. If an applicant or recipient owns more than one piece of nonbusiness property under this category, the $6,000 exclusion applies to the combined equity value of all the properties and not to each separate property.

Example: Nick owns a fish camp valued at $5,000. The fish camp is used in the summer to prepare fish for his family's use through the winter. He also owns a cabin valued at $7,000 that is used during hunting season. $ 5,000 Fish Camp + $ 7,000 Cabin $12,000 Combined Equity Value - $ 6,000 Exclusion $ 6,000 Countable Equity Value

3. Nonbusiness property excluded up to $6000 equity if it produces a 6 percent rate of return

Up to $6000 of the equity value of nonbusiness income-producing property is excluded from resources if the property produces a net annual return equal to at least 6 percent of the excluded equity value. Any portion of the property's equity value that exceeds $6000 is treated as a countable resource. The liquid assets of an item of nonbusiness income-producing property are not excluded.

Nonbusiness property that is in current use, but is earning less than 6 percent of its excludable equity value must have its entire equity value treated as a countable resource unless:

Some unusual circumstance has caused a temporary reduction in the net earnings, and

The usual earnings would satisfy the 6 percent test, and

The client furnishes evidence of a reasonable expectation that the property will again satisfy the 6 percent test within 24 months from the end of the taxable year in which the unusual circumstance began.

This type of property includes rental property such as a rental home and land leases.

Example 1: Mr. Jones lives in an apartment and is renting out his formerly excluded home, which has an equity value of $10,000. Even if the property produces a 6% return (6% x $6000 = $360), $4000 of its equity value cannot be excluded under this provision, and must be counted as an available resource.

Example 2: Mrs. Patterson owns a mobile home (not her home) that has an equity value of $3000. She owns other property that has an equity value of $2000. The mobile home produces a net annual return of $750, and the other property produces less than $50 a year. Since the mobile home produces more than a 6 percent return (6% x $3000 = $180), its equity value is excluded. Since the other property produces less than a 6 percent return (6% x $2000 = $120), its equity value counts as an available resource.

432-3 B. RESOURCES SET ASIDE AS PART OF AN APPROVED PLAN FOR ACHIEVING SELF-SUPPORT

A plan for achieving self-support allows blind or disabled (but not aged) individuals to set aside specified income and/or resources necessary for the achievement of its goals. Exclude the resources of a blind or disabled individual if they are needed to fulfill a plan for achieving self-support and the plan has been approved by either the Social Security Administration (in the case of an SSI recipient) or the Division of Vocational Rehabilitation (in the case of a non- SSI APA applicant or recipient).