Page 60

x .06 $ 120 The property must produce a net annual income of $120 to meet the 6% net annual income test. STEP 4: Determine the net annual income. $ 600 Gross monthly rent x 12 Months $ 7,200 Gross annual rent - $ 3,850 Interest on mortgage - $ 300 Property taxes - $ 300 Insurance - $ 100 Other operational expenses $ 2,650 Net annual income STEP 5: Compare net annual income to 6% of the equity value based on the present use value determined in Step 3. The net annual income of $2,650 is greater than $120, which is 6% of the equity value of the property, based on the present use value. $6,000 is excluded from the equity based on the CMV (tax value) of the property and the remainder, $1,000 is a countable resource. H. Special Instructions for Income Producing Property 1. If income is verified according to instructions in MA-2250, Income, and included in the monthly budget, then the income is considered received for purposes of the 6% income test. This is true even if it is discovered that the income was not actually paid to the a/b. The income is counted in the person’s budget and is included in his deductible or patient monthly liability. 2. The 6% net annual income requirement is waived when property which has formerly produced annual income produces no income due to natural disaster. EXAMPLE: Storms, drought, fire, hurricanes, etc. a. A statement to this effect from the local ASCS office (for crop damage), insurance company, FEMA, or county extension agent is necessary as verification. b. The property would have to produce an income in the next 12 months for the income producing exemption to continue, unless the conditions, which prevented the production of income, were beyond the a/b’s control. 3. An asset is income-producing on the day that a contract for rental/lease is signed or a verbal agreement is made (rent may be paid monthly, quarterly, semi-annually, annually, etc., and may be due at some point after the date of the contract/verbal agreement). 60