5331 Home and Surrounding Property - The home is defined as real property in which the applicant or recipient is living or from which he is temporarily absent. This includes the tract of land and contiguous tracts of land upon which the house or other improvements essential to the use or enjoyment of the home are located. Tracts of land are contiguous if lying side by side, including tracts separated by streets, alleys, or other easements. This does not include pieces of property that touch only at the corners. The home and surrounding property shall remain exempt when temporarily unoccupied for reasons of employment or training for future employment, illness, or uninhabitability caused by casualty or natural disaster, if the household intends to return. Households that currently do not own a home, but own or are purchasing a lot on which they intend to build or are building a permanent home, shall receive an exclusion for the value of the lot and, if it is partially completed, for the home. However, if the household currently owns a home, this exclusion does not apply.
The home, as defined, is exempt without regard to its value. For all programs, the home becomes nonexempt when the client has been absent for 12 consecutive months and does not intend to return (see 5331.1) and occupy the property as a home within the same 12 months. (See 5331.2 for clients who enter ACH facilities or receive HCBS services outside the home.)
5331.1 Transfer of The Home - If the applicant/recipient transfers his/her ownership interest in the home to some other person or legal entity (including a revocable or irrevocable trust), the home loses its exempt status.
5331.2 Intent to Return - If there is intent to return, the applicant/ recipient or a person authorized to act in his or her behalf (spouse, conservator/guardian, personal representative, or person who has received written authority from the applicant/ recipient to act in his or her behalf) must provide a written and signed statement indicating the reason for the client's absence as well as his or her intent to return home. (See Appendix for Statement of Intent to Return Home form or Section H of the ES-3100.4) The absence can be for any purpose, whether medical or nonmedical. The statement shall be accepted without challenge and regardless of whether or not the intent is realistic unless the actions of the applicant/recipient or other persons would contradict the statement (e.g., attempting to sell the property). In such instances, further clarification shall be obtained. The client's statement shall remain in force until such time as either actions are taken which contradict the client's intent or another signed statement is obtained which negates the previous intent.
An intent to return is, however, nullified when the applicant/ recipient transfers his/her ownership interest in the home to some other person or legal entity. Examples of property transfers which nullify exempt status or an intent to return include a sale or gift of the home property and a transfer of the home to a trust. When there is a loss of ownership by the applicant/ recipient due to such a transfer, the property cannot continue to be exempt. For example, when a trust is created and the home is transferred to the trust, the trust becomes the legal owner of the property. The home would then no longer be viewed as owned by the applicant/recipient even if that person is the trustee.
An intent to return statement would not be required in those instances in which a spouse, other legal dependent, or dependent relative continues to live in the home as indicated below or when the absence is due to a planned brief stay in an institutional arrangement not to exceed the month of entrance and the following 2 months. In all other instances, such a statement must be developed if there is intent to return.
5331.3 Institutional Living - For persons who enter institutional living arrangements (whether or not the facility is Medicaid approved) for other than a planned brief stay or who will receive HCBS care outside of the home, the home shall retain its exempt status if:
a spouse or other legal dependent continues to live in the home; or
a dependent member of the immediate family continues to live in the home. Dependency may be of any kind (e.g., financial, medical, etc.) The client's or dependent member's allegation shall be accepted without challenge unless there is reason to question it.
For purposes of this provision, the immediate family shall include the individual's children, grandchildren, stepchildren, in-laws, parents, stepparents, grandparents, aunts, uncles, siblings, step-siblings, half-siblings, nieces, nephews, and cousins of any degree.
If none of the above conditions exist and the client does not intend to return home (see 5331.2), the home will retain its exempt status for three months beginning with the month the client enters the institution or HCBS arrangement. See 8110 for the definition of institution. At the end of that time, the home must be considered in determining eligibility unless the client begins to make a bona fide effort to dispose of the property. This would also be applicable in instances in which home ownership is transferred as described earlier.
5331.4 Reverse Mortgage - A reverse mortgage is a specific, federally insured form of a home equity loan. A reverse mortgage converts home equity into cash, while the individual continues to use the home. The payments may come in the form of predictable, regular payments, much like income. A reverse mortgage differs from a standard home equity line in that it is only available to individuals age 62 and over.
Like any home equity loan, the reverse mortgage reduces the home’s equity value. The payments from the reverse mortgage are exempt as income, but countable as a resource the month following the month of receipt.
5332 Income Producing Property - Property which produces income consistent with its fair market value is exempt in full, even if only used on a seasonal basis. This would include property such as land or other property which is rented and not actively managed per 6313 (1), timber or mineral rights, and farm property where the individual is no longer actively involved in the management of the farm. Generally, income from such property would be considered as unearned income.
When it is necessary to determine if the property is producing income consistent with its fair market value, workers may contact local realtors, tax assessors, the Small Business Administration, or other similar sources to determine the prevailing rate of return (e.g., square foot, acreage, rental, etc.) for similar usage of real property in the area. If it is determined that the property is not producing income consistent with its fair market value (for instance, the property is being leased for a token payment), such property would be counted as a resource. However, if the property was leased for a return that was comparable to other property in the area leased for similar purposes, it would be considered as producing income consistent with its fair market value and would not be considered a resource.
If the property is not in current use, it may be exempted under this provision as long as the individual expects its use to resume within one year of the date of last use. If the individual does not expect use of the property to resume, the property shall be counted in full.