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(iii) If the expense cannot be paid in one month, divide the expense over the number of months in the installment plan or the number of months necessary to allow for total recoupment. The months required may extend into the next certification period.

(iv) It is allowable to not meet the 6% income test while the unexpected expense is being deducted from net countable monthly rental income. Flag case to recalculate deductible or PML in the month that they expense is expected to be used up.

3) For PLA when the change in net rental income results in a decrease in countable income follow adequate notice requirements.

4) For LTC cases, change PML for future months.

5) Follow instructions in MA-2230, Financial Resources at review, to use only predictable operational expenses in the base period for the 6% test. Do not use unexpected operational expenses for the 6% test.

(c) Regardless of whether rental income is received monthly or other than monthly:

1) Verify operational expensed for the previous calendar yest based on the expenses on the tax form if using tax statements to determine income, or 2) Verify operational expenses for the twelve months base period to the application or recertification interview for a business if using business records.

(d) Non-allowable Expenses

Do not deduct the following expenses from rental income:

1) Operational expenses not paid by the a/b from the income received. If expenses are paid by a third party, then do not allow as operational expenses unless a/b reimburses the payee.

2) The principal portion of a mortgage payment. (The principal is deducted from the tax value as an encumbrance in reserve.