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Title 8: Medicaid Page 40 Iowa Department of Health and Human Services Employees’ Manual Chapter E: Income Types of Non-MAGI-Related Income Revised April 11, 2025 Rental Property or Life Estate Income Rental Property or Life Estate Income (Cont.)  Any purely personal expenses not associated with production of the income. If the expenses are both personal expenses and business expenses, prorate the expense following IRS policies used on the tax return.

If a tax return is not available, deduct the same expenses that would be used on the tax return, as long as the expenses are reasonable as defined by IRS. The expenses of income are reasonable as long as the expense is ordinary and necessary as defined in the industry. You may need to contact a disinterested real estate agent, banker, farm manager, or other knowledgeable person in the particular industry.

Examples of allowable expenses: Examples of expenses that are not allowed:

Repair of roof shingles Replacement of the roof

Replacement of broken light Replacement of wiring

Replacement of faucet Replacement of plumbing

NOTE: Refer to NJA0094, Income under Rental Income or Losses for the process to enter this type of income in ELIAS. Resource Conversion or Sale 20 CFR 416.1102, 20 CFR 416.1103; P. L. 103-60 Consider the conversion or sale to be a change in the form of a resource. The increase in value of a resource is not considered income. An example of a resource value increasing when the value of stock increases from $100 to $110 in a six- month period. Resource Replacement 20 CFR 416.1102, 20 CFR 416.1103; P. L. 103-60 Any payment to a client to replace a resource that was lost, damaged, or stolen is not considered income. Examples include insurance payments and private or public fund payments.