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MEDICAL SERVICES POLICY MANUAL, SECTION E
E 516 Real Property Exclusions
a. PROPERTY WITH EQUITY UP TO $6000 EXCLUDED IF PRODUCING A 6 PERCENT ANNUAL RATE OF RETURN This exclusion applies to individuals who have an interest in mineral or timber rights, rented farmland, rented dwellings, etc., and they are not considered to be conducting a trade or business. Up to $6000 equity may be excluded from the property described above if it is producing at least a 6 percent annual return on the amount of equity excluded. Any equity remaining after the exclusion is given will be included with other countable resources. Example: A mobile home on non-home land with total combined equity value of $7000 is being rented for $60 month/$720 year. Six percent (6%) of $6000 is $360. Since the annual return ($720) is greater than 6 percent of $6000, $6000 of the equity value of this property may be excluded from resources. The remaining $1000 equity must be counted as a resource. If an individual has more than one non-home income producing property interest, the total equity value excluded cannot exceed $6000, and the rate of return must equal at least 6 percent of the excluded equity for each activity. Example: Mr. Patterson owns two non-home properties. One is pasture land with an equity value of $4000. It is leased for cattle grazing for $300 per year. Six percent (6%) of $4000 is $240. Since the annual return ($300) is greater than 6 percent of $4000, the entire $4000 equity value of this property may be excluded from resources. Only $2000 potential property exclusion remains for any additional properties under this exclusion. The second property has an equity value of $3000. A neighbor pays $50 a year to plant his garden on it. Six percent (6%) of $2000 (the remaining potential equity exclusion) is $120. Since the annual return ($50) is less than 6 percent of $2000, the equity exclusion is not applied and the property’s equity value of $3000 is a countable resource. If the property is not excludable because the annual return is less than 6 percent of the excluded equity value, the total equity value of the property is a countable resource.