Examples of real property are the home, buildings, land and vacation homes. For Life Estates, see 5340 (3).
The fair market value of real property in Kansas is determined by the use of the State appraised market value for the current tax year. The appraised value of the property is used to establish fair market value. Other valuations pertinent to taxation, such as the agricultural use or the assessed value, are not used for this purpose.
If the property has not been appraised, is located out of state, or the value is under appeal,an estimate of its value shall be obtained from a knowledgeable source. Examples of knowledgeable sources include real estate brokers and realtors; local office of the Farmer's Home Administration (rural land); banks, savings and loan associations, mortgage companies and similar lending institutions; reliable private assessors, If the market value of the property as established by either of these processes is not satisfactory to the client or the agency. Either party has the right to request an estimate or appraisal from a disinterested real estate broker. The cost of the estimate or appraisal, if any, shall be the responsibility of the agency.
Exempt Values - The resource value of the following classifications of real property shall be exempt. However, if such property is transferred to a trust, it loses its exempt status as the trust becomes the legal owner of the 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. Except for clients who are in an HCBS, Pace, or institution, the home becomes nonexempt when the client has been absent for 12 consecutive months and does not intend to return (see 5331.2) and occupy the property as a home within the same 12 months. (See 5331.3 for clients who enter ACH facilities or receive HCBS services outside the home.)
Persons originally applying for long term care assistance on or after January 1, 2006 with equity interest in the home in excess of the Substantial Home Equity limit as noted in the , Kansas Medical Assistance Standards are ineligible for long term care assistance. Home equity limit is applicable to payment of institutional, HCBS and PACE assistance. Excess home equity does not impact eligibility for regular medical assistance.
Example: Mr. Smith owns home property worth $650,000. The home is valued at $300,000 and 250 acres of farmland are valued at $350,000. The farm is rented and is producing income consistent with the market value. The farm is exempt. Therefore, only the value of the home would be considered, or $300,000. Mr. Smith is not ineligible for LTC assistance based on these provisions.
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. For Medically Needy, QMB, LMB and QWD, a home becomes other real property as provided in 5340 when the applicant/recipient is absent unless he or she intends to return to the home.
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 M1, Statement of Intent to Return Home or Section G.4 of the KC1500) 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.
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:
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.
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.
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.
Ownership interest in a property where a life interest has been conveyed is considered a countable asset for the owner according to the provisions of this section.
With a life estate, the holder retains the right to use the property during his or her lifetime, but actual ownership of the property is transferred to another person or persons. Establishing a life estate is essentially a means of limiting property ownership to a person’s lifetime. To assess the individual’s interest in the property, determine if the individual has a life interest or remainder interest in the property:
A life interest can be established by transferring the underlying property and retaining a life estate on property the individual owned or by receiving a life interest in property in which another individual owned the underlying property. In both cases, the individual’s ownership is limited to the life interest. The value of the life interest is determined by the life tenant’s age.
Both the life interest and the remainder interest in property are countable as a resource. However, property in use as a home or income producing may be exempt. For property currently in use as a home, see 5340. If the property is income-producing, refer to 5332. Exemptions apply only to the specific individual meeting the exemption.
Example: Edna transferred a remainder interest to her son, Dave. Edna continues to live in the home. The life interest is exempt for Edna as she is living in the home. But, the remainder interest owned by Dave is countable if he were to apply for assistance.
Either the remainder owner or the life tenant may sell their individual ownerships without the permission of the other. The refusal of the other owner to sell is not considered a legal impediment to the sale, but may be used as an argument to reduce the fair market value of the property per 5331.2.
The value of either the life interest or the remainder interest is established by considering the life tenant’s age and total value of the property. The value derived from using the T-3, Life Estate Valuation Table, which establishes a value based on the an actuarially determined life expectancy of the life tenant.
However, the applicant/recipient may provide evidence to demonstrate a lower fair market is applicable.
Example: Nancy is a 56 year old woman with terminal cancer. She named her adult son, Adam, as the remainder owner on her home a number of years earlier. Using the life estate valuation table, the fair market value of her life estate is $12,000, because of Nancy’s age. But, given her health status, Adam cannot find a buyer. Adam and Nancy may demonstrate a fair market value based on factors other than Nancy’s age, such as her health status.
Property which is essential to employment or self-employment of the individual is exempt. This would include property such as farm land or business property where the person is still actively involved as a manager. Income from such property would usually be considered as earned income.
If the property is not in current use, it may be exempted under this provision as long as the individual expects to resume its use within one year of the date of last use. This period can be extended an additional year if the individual has a disabling condition which prevents him or her from resuming the activity within the first year. Documentation is required. If the individual does not expect to resume use of the property, it shall be counted in full.
Restricted or allotted land held by an enrolled member of an Indian tribe which cannot be sold or transferred without permission of other members of the tribe or a federal agency is totally exempt.
Real or personal property which is directly related to the maintenance or use of a vehicle that is used primarily for producing income or necessary to transport a physically disabled household member shall be excluded as a resource. Only that portion of real property determined necessary for maintenance or use is excludable under this provision. For example, a household which owns a produce truck to earn its livelihood may be prohibited from parking the truck in a residential area. The household may own a 100-acre field and use a quarter acre of the field to park and/or service the truck. Only the value of the quarter acre would be excludable under this provision, not the entire 100-acre field.
Real property shall be considered, including the following: