Note | Charts in this article series are from the HOTMA Audit Toolkit received by attendees of the 2024 and 2025 Costello Compliance Summit.

Step 5 | Implement HOTMA asset calculation methods

Under HOTMA, there are three types of assets, each of which is addressed differently. These include (1) necessary personal property [NPP], (2) non-necessary personal property [NNPP], and (3) real property. NPP is excluded, real property and income from it is counted. The value of NNPP is counted or excluded depending on whether the total family NNPP exceeds a threshold that is adjusted annually. Income generated by NNPP is always counted, however.

As HOTMA focuses primarily on income exclusions, it does the same for assets. After discussing the disposed asset rules (which are unchanged by HOTMA), the regulation at 24 CFR 5.603 under the definition for net family assets includes a list of 11 excluded assets.

Once net family assets have been determined, an additional rule requires that asset income be imputed for some assets if total net assets exceed a threshold that is adjusted annually for inflation.

Conclusion

This article series does not cover all HOTMA-related details. They provide a proven framework that compliance professionals and others can use to gather the knowledge that they need and develop an implementation plan.

In summary, the suggested steps include 

Pre-Step | Build a HOTMA library

Step 1 | Determine state HOTMA implementation policy

Step 2 | Adapt verification rules

Step 3 | Develop a system to implement annual adjustment factors

Step 4 | Implement HOTMA income calculation methods

Step 5 | Implement HOTMA asset calculation methods

Return to this blog regularly for more HOTMA information, always paired with practical action steps!

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