Real Property Not Used as a Home
Real property (land and/or improvements on land) owned by an applicant/recipient will be determined to be producing a net monthly income over a period of one year which equals 6% of the gross market value WHETHER OR NOT the applicant/ recipient is receiving the income. This income must be applied to the income calculations WHETHER OR NOT the land is able to produce income.
Encumbrances against the market value are not allowed. ExampleExample
An applicant owns four acres in a landslide area of the Santa Cruz mountains. There are no improvements on the property. He has been trying to sell the property, but has not been successful.
The gross market value of $50,000 must be used to obtain the 6% gross yearly value. The gross yearly amount is divided by twelve (12) months to determine the net monthly income.
Determination of Value
The Gross Market Value is obtained from the most recent property tax assessment. The assessed value is the same as the gross market value, if the property is located in California.
The assessed property value in California may also be obtained by calling the local tax assessor's office, or by using the value of an appraisal by a member of a recognized professional appraisal society. All contacts must be documented in a CalSAWS Journal Entry.
For out of state property, the tax assessor's offices in other states must be contacted in order to obtain its market value.
Determination of Ownership Share of Value
The owner is the person or persons who hold legal title. Title may be sole and separate, joint or in common. If the title states “John Doe, et. al.," this means that others besides John Doe hold legal title. The “et al.,” means “and all others.”
- If the client is the sole owner of the property, the entire gross market value must be used in the computation of the net monthly income.
- If the client shares ownership with other persons, only the client's share will be used in the computation.
Example: Client holds a one-third interest in a home. He shares the title with his aged father and younger brother. His father lives alone in the home but pays no rent.
The gross market (assessed) value of the property is $150,000. One-third share equals $50,000 and is subject to the net monthly computation.
Computation of Net Monthly Income
- Calculate the share of the gross market value.
- GMV = $150,000 ÷ 3 = $50,000
- Calculate 6% of the gross market value.
- $50,000 x 6% = $3,000
- Divide the 6% figure by 12 months income amount.
- $3,000 ÷ 12 = $250
- Determine what amount should be used as income.
- Actual Rent = -0-
- Net Income = $250 a month to the budget (6% of monthly market value).
Note: The amount of greater value (the actual rent received OR the calculated amount) will always be used as net income to the budget.
Related Topics
Equipment and Materials for Self Employment