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The customer and her spouse have a small commercial fishing business. They own a commercial fishing permit granted by the State Commerce Commission, a boat, and fishing tackle. They have been in business since 2002. The Arizona Corporation Commission records show incorporation in 2003. The customer also provided a copy of their most recent business bank statement for proof of income. The bank statement supports the customer’s statement that the property is currently in use. Since this is a valid trade or business, the boat, tackle and permit are all excluded as essential to self-support.
The customer owns a mobile home that he rents out and a small vacant lot that he rents out for event parking. The mobile home has an equity value of $6,100 and produces net annual rental income of $1,000. The vacant lot has an equity value of $4,000 and produces net annual rental income of $120. Each property’s rate of return is calculated separately, as shown below:
Mobile Home - Net annual income of $1,000 divided by $6,100 = 16.3% rate of return. Since the mobile home produces more than a six percent return, $6,000 of its equity value is excluded. The remaining $100 is counted.
Vacant Lot – Net annual income of $120 divided by $4,000 = 3% rate of return. Since the vacant lot produces less than a six percent return, its equity value of $4,000 is counted.
The customer owns an apartment complex with multiple units on the same property. The customer does not actively manage or maintain the property. The apartment complex has a property value of $200,000.
The customer receives $30,000 per year from the apartments. The customer has the following expenses related to the apartment: $2,500 a year in property taxes, and $2,500 a year for insurance.
After expenses are accounted for, the customer’s net income from the apartments is $25,000. Net annual income of $25,000 divided by $200,000 = 12.5% rate of return. The equity value of the property is reduced by $6,000.
Customer owns property with an equity value of $75,000. The customer has an outstanding agreement with a mining company that they may use the property for mining purposes. This mining company pays the customer $6,000 per year. Net annual income of $6,000 divided by $75,000 = 8% rate of return. This property’s equity value is reduced by $6,000.
A farmer has a 4-acre lot 5 miles from his house. He raises 3 cows and a garden every year. He sells two of the cows for $700 each and butchers the remaining cow for personal use. He sells the vegetables once he fills his personal freezers. He makes $1,200 from selling vegetables. The earnings are reviewed as self-employment income. Since this property is used to produce goods or services for the daily needs of the customer, $6,000 is deducted from the equity value of the property.