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• Does the IRS regard this as a trade or business? • Does the individual have documents to support the claim of trade or business such as licenses, permits, registration, etc.? • Is the individual a member of a business or trade association? 16.9.3 Nonbusiness Property Excluded up to $6,000 Regardless of Rate of Return This category includes non-business property used to produce goods or services essential to self- support. Any portion of the property's equity value in excess of $6,000 is not excluded. Nonbusiness property essential to self-support can be real or personal property. It produces goods or services essential to self-support when it is used, for example, to grow produce or livestock solely for personal consumption, or to perform activities essential to the production of food solely for home consumption. Example 1 John owns two acres of land that he uses to grow fruits and vegetables for his personal consumption. Up to $6,000 of the equity value of the property is exempt. 16.9.4 Nonbusiness Income-Producing Property Excluded up to $6,000 if it Produces at Least Six Percent Rate of Return Nonbusiness income-producing property is real property or other non-liquid property that provides rental or other income but is not used as a part of a trade or business. Nonbusiness income producing property includes, but is not limited to, the following: • Structures producing rental income • Land producing rent or other land use fees (non-liquid notes or mortgages, royalties for timber rights, mineral exploration, etc.) Example 2 James is applying for EBD Medicaid. He lives in a CBRF and is renting out his home which has an equity value of $20,000. He does not intend to return to the home. The income from the rent exceeds 6 percent of the equity value of the home, so $6,000 of the equity value is exempt. The remaining $14,000 is a counted asset.

Example 3 Joan is applying for EBD Medicaid. She lives in her home but also owns a lake cottage in northern Wisconsin. She rents the cottage during the summer months. The income from the rent does not equal 6 percent of the equity value of the cottage. The entire equity value of the cottage is a countable asset. If the excluded portion produces less than a six percent return due to circumstances beyond the person's control (e.g., crop failure, illness), and there is reasonable expectation that it will again produce at least a six percent return, continue to consider the first $6,000 in equity as excluded. This page last updated in Release Number: 22-02 Release Date: 08/01/2022 Effective Date: 08/01/2022