HOTMA | Sorting the THREE New $50,000 Asset Rules | Part 2

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 #2 | $50,000 Non-Necessary Personal Property Threshold. According to the new definition at 24 CFR 5.603(b)(3)(i) and (ii) of Net Family Assets, "excluded from the calculation of net family assets are...the combined value of all non-necessary items of personal property if the combined total value does not exceed $50,000" (as adjusted). In other words, if the combined value of non-necessary personal property that a household owns is $50,000 or less, the value of all of the non-necessary personal property is excluded. Note, however, that the income from the property is counted even if the value is excluded.

An area that we have observed confusion on this $50,000 asset rule with the other two is that for this rule we are dealing with the total value of non-necessary personal property, and NOT total net household assets, which is the number that the other two $50,000 rules (self-certification and imputed asset income) relate to.

Example #1 | Below is an example from HUD guidance where the total household non-necessary personal property does not exceed $50,000 and is excluded. Each piece of non-necessary personal property is valued at $0.

Example #2| To expand on the below, if we alternatively assume that the boat was worth $46,000 (rather than $15,000), the total of non-necessary personal property (checking and boat) would total $51,000 (instead of $20,000) and the value of both assets would be counted.

NOTE: if the checking account has a 1% interest rate, the $50 income ($5,000 x 1%) would be counted for the checking account in either example. 

For a deeper discussion comparing/contrasting NECESSARY and NON-NECESSARY personal property, check out this post HERE.