Can I qualify for Medicaid if I have a rental property?

[Qbert]

What is the name of your state (only U.S. law)? New York

I would like to know if I qualify for Medicaid. I own a small house that I rent out for $2600 a month. I pay a mortgage of approximately $1900 a month. The $1900 consists of 3 parts:

1. principal: $550

2. interest: $700

3. escrow: $625

I was told that on my NY State of Health application, I could deduct only the interest part, so that my monthly income would be $2600 rent minus $700 interest of mortgage = $1900. (Note: I am not working currently, so this accounts for nearly all of my income.)

So if this is the right calculation, I would be earning too much to qualify for Medicaid. Is it the right calculation for my income?

 

[quincy]

Here is a link to Medicaid eligibility:
http://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Eligibility/Eligibility.html

 

[OHRoadwarrior]

Ummm, you are aware that when you make principal payments that are lower than the interest payments, the balance you owe on the property increases rather than decreases. Is this some form of reverse mortgage?

 

[single317dad]

Ummm, you are aware that when you make principal payments that are lower than the interest payments, the balance you owe on the property increases rather than decreases. Is this some form of reverse mortgage?

Payments that are mostly interest is a completely normal result of mortgage amortization, especially early in the repayment term.

 

[OHRoadwarrior]

Payments that are mostly interest is a completely normal result of mortgage amortization, especially early in the repayment term.

Look at his numbers again. $1900 payment total. $625 is for escrow expenses such as title insurance, taxes, insurance etc., unless that number contractually changes at some point to a lower number and the principal payment then increases by the same, he will never own the property and will always owe a greater amount at the end of each month. The amortization schedule you are thinking of for example would be 90% interest and 10% principal reduction, with an inverse relationship. The key here being he always owes more principal at the end of the month than he pays down with this loan. For example say the starting sale price was $100,000. He makes a principal interest payment at the end of month one and the new principal balance is $100,150. It has increased, rather than decreased. In a normal loan a logical structure would be for the payment to be higher than the interest and the balance to be slightly less, say $99,950 at the end of month one.

 

[Zigner]

Look at his numbers again. $1900 payment total. $625 is for escrow expenses such as title insurance, taxes, insurance etc., unless that number contractually changes at some point to a lower number and the principal payment then increases by the same, he will never own the property and will always owe a greater amount at the end of each month. The amortization schedule you are thinking of for example would be 90% interest and 10% principal reduction, with an inverse relationship. The key here being he always owes more principal at the end of the month than he pays down with this loan. For example say the starting sale price was $100,000. He makes a principal interest payment at the end of month one and the new principal balance is $100,150. It has increased, rather than decreased. In a normal loan a logical structure would be for the payment to be higher than the interest and the balance to be slightly less, say $99,950 at the end of month one.

No, you're wrong.

The OP is also wrong. His mortgage payment is NOT $1,900/mo. It is $1,250/mo with an additional $650 towards escrow.

Find a mortgage calculator online somewhere. Plug in a $250,000 loan at 30 years with 4.5% interest and then look at the amortization schedule. Using those numbers, OP would be about 12 years in.

 

[OHRoadwarrior]

OMG. Zig, where has my mind been this month? I guess even my high IQ could not offset 2 weeks of the flu coupled with my other medical issues. If I stick my head in the snow will everyone still see these posts?

 

[Zigner]

OMG. Zig, where has my mind been this month? I guess even my high IQ could not offset 2 weeks of the flu coupled with my other medical issues. If I stick my head in the snow will everyone still see these posts?

Hope you feel better quickly!

 

[Qbert]

Thanks for the replies!

I just refinanced my mortgage a few weeks ago (I was paying over $2300 a month prior), so that's why my interest is so high, I suppose.

Anyway, my question is what amount do I put on my insurance application (hopefully low enough that I'll qualify for Medicaid)?

Zigner, are you saying that I can deduct the $625 escrow from the rent I receive? If so, the calculation would be: $2600 rent - $700 interest - $625 escrow = $1275. And in that case, I WOULD qualify for Medicaid.

By the way, the person who said I should put $2600 rent - $700 interest = $1900 is my mortgage counselor or advisor (I forget her exact title) whom I'm putting on my application. However, she's not a lawyer.

 

[Zigner]

Thanks for the replies!

I just refinanced my mortgage a few weeks ago (I was paying over $2300 a month prior), so that's why my interest is so high, I suppose.

Anyway, my question is what amount do I put on my insurance application (hopefully low enough that I'll qualify for Medicaid)?

Zigner, are you saying that I can deduct the $625 escrow from the rent I receive? If so, the calculation would be: $2600 rent - $700 interest - $625 escrow = $1275. And in that case, I WOULD qualify for Medicaid.

By the way, the person who said I should put $2600 rent - $700 interest = $1900 is my mortgage counselor or advisor (I forget her exact title) whom I'm putting on my application. However, she's not a lawyer.

Apples/oranges.
All I am saying is that your MORTGAGE payment is interest & principal. Your ESCROW payment is paid at the same time per the same contractual loan agreement...

The escrow would be an expense (as it goes to pay taxes & insurance) - it doesn't lower your income.

ETA: Why don't you talk to the folks at Medicaid?

 

[I'mTheFather]

http://www.wnylc.com/health/afile/113/1/

For all categories, countable income is “net rental income” = gross rent less the ordinary and necessary expenses paid in the same taxable year.
DEDUCTIBLE EXPENSES28 - cost of:
(1) Taxes --Property, school, water and sewer;
(2) Utilities if they are included in the rent;
(3) Insurance (fire, windstorm, flood, theft and liability);
(4) Interest on mortgages;
(5) Essential maintenance & repairs (i.e., minor correction to an existing structure, snow removal); (6) Wages paid to employees for maintaining the property;
(7) Other expenses necessary to maintenance
NOT DEDUCTIBLE -- expenses not directly related to maintenance, including payment on mortgage principal, improvements to property, depreciation.
Expenses are deducted when paid, not when incurred.
When the rental property is also the A/R’s homestead (i.e., two-family residence), the allowable expenses are prorated based on the number of units designated for rent compared to the total no. units

 

[LdiJ]

http://www.wnylc.com/health/afile/113/1/

For all categories, countable income is “net rental income” = gross rent less the ordinary and necessary expenses paid in the same taxable year.
DEDUCTIBLE EXPENSES28 - cost of:
(1) Taxes --Property, school, water and sewer;
(2) Utilities if they are included in the rent;
(3) Insurance (fire, windstorm, flood, theft and liability);
(4) Interest on mortgages;
(5) Essential maintenance & repairs (i.e., minor correction to an existing structure, snow removal); (6) Wages paid to employees for maintaining the property;
(7) Other expenses necessary to maintenance
NOT DEDUCTIBLE -- expenses not directly related to maintenance, including payment on mortgage principal, improvements to property, depreciation.
Expenses are deducted when paid, not when incurred.
When the rental property is also the A/R’s homestead (i.e., two-family residence), the allowable expenses are prorated based on the number of units designated for rent compared to the total no. units

Of all the answers here, this one is the most correct.

 

[OHRoadwarrior]

To be clear, ignore all my posts in this thread, apparently my being under the weather has affected more than my body physically.

 

[single317dad]

To be clear, ignore all my posts in this thread, apparently my being under the weather has affected more than my body physically.

This is exactly why I hesitate to roast someone too quickly on the internet. You just don't know what's going on with that person on the other end of the line.

Get well soon.

 

[Qbert]

ETA: Why don't you talk to the folks at Medicaid?

I am using an advisor to help with my application, but I could call my state's Medicaid office (New York) and and check with them.