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Gross annual income - Gross annual operational expenses Net annual income G. STEP 5: Compare Net Annual Income Amounts For each piece of income producing property, compare the net annual income produced (STEP 4) to the net annual income that must be produced to exclude up to $6,000 equity in the property (STEP 3). 1. If the net annual income produced is less than the net annual income that must be produced, the property does not meet the 6% net annual income requirement. Count all of the equity, based on the tax value, of the property as a resource. 2. If the net annual income is equal to or greater than the net annual income that must be produced, then the property produces 6% net annual income. 3. Total the equity value (based on the tax value) of the pieces of property that produce a net annual income of at least 6% of their equity value. Only those pieces of property that meet the 6% income test can be included in the $6,000 exclusion. See IX.B. For detail instructions on multiple pieces of property, see IX.H.5. & 6. a. From the total equity of the property that meets the 6% income requirement, subtract $6,000. b. The equity over $6,000 is a countable resource. NOTE: Re-verify encumbrances and income produced at each application and redetermination as they are subject to change. EXAMPLE 1 CMV (Tax value) of property $70,000 Present Use Value $58,000 Property tax per year $ 300 Insurance per year $300 Other operational expenses per month $ 100 Monthly gross rent $450 A/B pays all expenses himself. Principal amount of the mortgage on the property is $10,000. STEP 1 Determine equity value of the property based on the tax value. $70,000 CMV (tax value) - $10,000 Encumbrances (principal of mortgage) $60,000 Equity STEP 2 Determine if the a/b is ineligible based on countable resources, regardless 58