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16 TITLE 16 HEALTH AND SAFETY DELAWARE ADMINISTRATIVE CODE Property can be excluded up to $6,000 equity regardless of rate of return if it is a nonbusiness property used to produce goods or services essential to daily activities. For example, land used to produce vegetables or livestock solely for consumption by the individual's household. 20320.5.3 Property Excluded Up To $6000 Equity If It Produces a 6% Rate of Return The property essential to self-support may be excluded up to $6,000 if it produces a 6% rate of return and meets the following two conditions. a. The property is used in a trade or business in the period before 5/1/90 b. The property is nonbusiness income-producing property, for example rental property. Up to $6,000 of the equity value can be excluded from resources if the property produces a net annual return equal to at least 6% of the excluded equity. Any portion of the property's equity value in excess of $6,000 is not excluded. If the property produces less than a 6% return, the exclusion can apply only if the lower return is for reasons beyond the individual's control and there is a reasonable expectation that the property will again produce a 6% return. 20320.5.3.1 Equity Determination Equity is the current market value less legal debts such as mortgages, liens, etc. Document the file with a copy of the appraisal of the fair market value. Determine rate of return based on income and value figures shown on the individual's Schedule E of Form 1040 for the prior year. If no tax return is available, obtain other appropriate evidence, for example a copy of the lease agreement. In addition obtain the estimated net and gross income from the property for the current tax year. 20320.5.4 Current Use of Property The property excluded under the above categories (20320.5.1, 20320.5.2, 20320.5.3) must be in current use in the type of activity described. If not in current use, there must be a reasonable expectation that the required use will resume within 12 months of last use. The 12-month period can be extended for an additional 12 months if nonuse is due to a disabling condition. 20320.6 Non-Home Real Property Non-home real property consists of land and buildings or immovable objects that are attached permanently to the land and that do not meet the definition of home or principal place of residence. 20320.6.1 Non-Home Real Property Current Market Value (CMV) Documentation Obtain the current market value (CMV) of the real property. The (CMV) may be determined by an estimate of the property's CMV from a knowledgeable source. The estimate must show: a. the name of the person providing the estimate; b. the name, address and telephone number of the business or agency for whom the person providing the estimate works; c. the basis for the estimate, including a description of the property and its condition and the value of similar property in the same area; and d. the period for which the estimate applies. Knowledgeable sources include but are not limited to real estate brokers, mortgage companies, banks, savings and loan associations, or similar lending institutions, or an official of the local property tax jurisdiction. The value of the property as a resource is its CMV minus the outstanding principal balance on any loan or mortgage unless there is a legal bar to the sale of the property. (See Section 20300.3 Resource Ownership ) 20320.7 Substantial Home Equity The policy in this section applies to nursing facility and HCBS recipients who are receiving Long-Term Care (LTC) Medicaid on or after January 1, 2006. It does not apply to recipients who were receiving LTC Medicaid prior to January 1, 2006, and who maintain continuous Medicaid eligibility as per the Deficit Reduction Act section 6014. 10 DE Reg. 1700 (05/01/07) 20320.7.A Receiving LTC Before 01-01-2006 If a Medicaid recipient started receiving LTC Medicaid before January 1, 2006, do not evaluate home equity at the next redetermination. As long as he remains continuously eligible for Medicaid, do not evaluate home equity. If the recipient is found ineligible for Medicaid, and he subsequently re-applies for LTC Medicaid, home equity must be evaluated when he reapplies. 10 DE Reg. 1700 (05/01/07) 20320.7.B Receiving LTC On/After 01-01-2006