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HOTMA | Sorting the THREE New $50,000 Asset Rules | Part 3

article assets hotma income calculations Jan 10, 2024

Series Outline

$50,000 as it relates to...

1. Asset Verification

2. Non-Necessary Personal Property

3. Imputing Asset Income

HOTMA has three rules relating to $50,000 and assets that can be easy to mix up. In this series, we deal with each of the three and help untangle any confusion. 

HOTMA $50,000 Asset Rule #3 | Imputed Asset Income Threshold.

HOTMA has changed the imputed asset income rule in a couple of significant ways. The first is that the threshold requiring that asset income be imputed has risen to $50,000 from $5,000. This is when total net assets exceed $50,000. Contrast this with the last rule discussed in article two of this series - the threshold at or below which non-necessary personal property is excluded. The other big change HOTMA made to the imputed asset rules is that income is only imputed on assets that cannot otherwise have income calculated. 

Example A household has a checking account and and a boat with a total net value of $35,670 and real property with a net value of $69,000. Because total non-necessary property (checking and the boat) do not exceed $50,000, they are excluded as assets (assigned $0 values) and only their income is counted, if it can be determined. However, the $0 non-necessary property is added to the real property and total assets exceed $50,000, totaling $69,000. Because total counted assets exceed $50,000, asset income will be imputed, if applicable. If the real property is being rented out, the actual rental income would be counted and nothing would be imputed. If the land is not being rented, income cannot otherwise be determined, and the income will be imputed on the asset by multiplying it by the current passbook savings rate. 

Final notes: The option to self-certify the value and income from total household assets (as discussed in article one of this series) also ends if the total net assets exceed the $50,000 threshold. Thus, both the option to self-certify assets and the requirement to not impute any income for assets ends when household assets exceed $50,000. Also, the $50,000 will be adjusted each year. It will apply throughout 2024, but will likely change based on inflation each year after that. All references to "$50,000" should be read as "$50,000, as adjusted".

For more details on imputing asset income, see this POST.

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