Page 272

SNAP CERTIFICATION MANUAL – SECTION 5000 5700 Unearned Income 5710 Installment Contracts

In 1996, Mr. Green sold this land to Mr. Redd. Mr. Redd paid Mr. Green $1,000 down and agreed to pay $175 per month for 240 months. Mr. Green will continue to pay the bank $150 per month on the original mortgage. Since the taxes and insurance are included in this payment, Mr. Green will continue to incur these costs until the original mortgage is paid. Mr. Redd agreed to pay all brokerage fees. The $1,000 down payment will be excluded as income since it is considered a lump sum payment. The full $175 payment (less exclusions for the allowable costs of doing business) will be counted as unearned income. The allowable costs of doing business are the costs of taxes and insurance incurred by Mr. Green and the interest Mr. Green pays on the original mortgage. Taxes $200

Insurance $100 $300 Yearly Costs - 12 months = $25 permonth Monthly Interest Payments Made by Mr. Green $60 per month Monthly Costs of Taxes and Insurance + $25 per month Total Excludable Costs Per Month $85 Monthly Payments Received by Mr. Green $175 Total Monthly Costs of Doing Business - $85 Portion of Payment to be Counted in Budget $90

EXAMPLE 2:Mr. Long also sold 20 acres of land to Mr. Redd. He will also receive $1,000 down and $175 per month for 240 months. There are no mortgages on the property Mr. Long sold. Mr. Redd pays all taxes and insurance costs on the property and paid all brokerage fees at the time of the sale. The entire $175 monthly payment will be counted as income in Mr. Long’s SNAP budget.

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Page 272

Official source

SNAP CERTIFICATION MANUAL – SECTION 5000 5700 Unearned Income 5710 Installment Contracts

In 1996, Mr. Green sold this land to Mr. Redd. Mr. Redd paid Mr. Green $1,000 down and agreed to pay $175 per month for 240 months. Mr. Green will continue to pay the bank $150 per month on the original mortgage. Since the taxes and insurance are included in this payment, Mr. Green will continue to incur these costs until the original mortgage is paid. Mr. Redd agreed to pay all brokerage fees. The $1,000 down payment will be excluded as income since it is considered a lump sum payment. The full $175 payment (less exclusions for the allowable costs of doing business) will be counted as unearned income. The allowable costs of doing business are the costs of taxes and insurance incurred by Mr. Green and the interest Mr. Green pays on the original mortgage. Taxes $200

Insurance $100 $300 Yearly Costs - 12 months = $25 permonth Monthly Interest Payments Made by Mr. Green $60 per month Monthly Costs of Taxes and Insurance + $25 per month Total Excludable Costs Per Month $85 Monthly Payments Received by Mr. Green $175 Total Monthly Costs of Doing Business - $85 Portion of Payment to be Counted in Budget $90

EXAMPLE 2:Mr. Long also sold 20 acres of land to Mr. Redd. He will also receive $1,000 down and $175 per month for 240 months. There are no mortgages on the property Mr. Long sold. Mr. Redd pays all taxes and insurance costs on the property and paid all brokerage fees at the time of the sale. The entire $175 monthly payment will be counted as income in Mr. Long’s SNAP budget.