How Can Owning Rental Property Impact Eligibility?
Rental Property & Medicaid Eligibility – Quick Facts
Up to $6,000 of equity can be exempt if the property generates annual income of at least 6% of its equity value.
Yes—Medicaid counts rent toward your income limit, though some deductions may apply.
Property must produce income ≥ 6% of equity to qualify for exemption; otherwise the full equity counts.
Yes—New York exempts up to $12,000; Florida exempts the full value if local rent standards are met.
Proof of ownership, value, debt, and rental income—often deeds, tax statements, leases, and receipts.
Yes—Certified Medicaid Planners can use trusts, spend down strategies, or exemptions to protect assets.
How Can Owning Rental Property Affect Medicaid Eligibility?
Owning rental property—whether a house, apartment, condo, farmland, timber rights, mineral rights, or even storage lots—can influence Medicaid eligibility. Medicaid may count both the equity value and the rental income toward eligibility limits, depending on specific state rules and whether certain exemptions apply.
What Is Medicaid’s Asset Limit?
In 2025, most states cap assets at $2,000 for a single applicant (California has no asset limit). For married couples, limits vary depending on whether one or both spouses apply and which Medicaid program is involved. The Community Spouse Resource Allowance (CSRA) can allow a non-applicant spouse to keep up to $157,920 in 2025.
When Can Rental Property Be Exempt from the Asset Limit?
What Is the 6% Rule and How Does It Work?
Medicaid can exempt up to $6,000 of a rental property’s equity if it earns at least 6% of its equity value in annual income. Equity is the fair market value minus any debts.
What Are Examples of the 6% Rule in Action?
Fully Exempt
Lot worth $2,000 rents for $600/year — income exceeds 6% ($120), so all $2,000 is exempt.
Partially Exempt
Apartment worth $10,000 rents for $4,200/year — $6,000 exempt, $4,000 counts toward the asset limit.
Not Exempt
Farmland worth $4,500 rents for $200/year — income below 6% ($270), so full $4,500 counts.
Do Some States Calculate the 6% Rule Differently?
Yes—states like Delaware, Ohio, Utah, and West Virginia use 6% of the potentially excluded equity value instead of the full equity value.
What Happens If You Own Multiple Rental Properties?
Each property is tested individually for the 6% rule. Only a combined total of $6,000 from properties meeting the requirement is exempt; the rest counts toward the asset limit.
Is There an Exception If the 6% Rule Isn’t Met?
Yes—if income drops below 6% for reasons beyond your control and is expected to recover, states like Texas allow an exemption for 18 months, while Indiana, Minnesota, Ohio, Mississippi, and Utah allow 24 months.
What Documentation Is Needed to Claim the Exemption?
- Ownership proof: deed, will, or tax statement
- Value/debt proof: mortgage statements, appraisals, tax assessments
- Income proof: leases, rent receipts, bank records, tax returns (Schedule E)
How Do States Differ on Rental Property Rules?
- Higher exemptions: NY allows $12,000; FL exempts the entire value if rents meet local market standards
- Calculation method: Some states use excluded equity instead of total equity
- Return-to-6% window: Ranges from 18–24 months
What Can You Do If Your Property Puts You Over the Asset Limit?
Can You Sell and Spend Down the Proceeds?
Yes—proceeds can be spent on exempt assets without violating Medicaid’s Look-Back Rule, such as home improvements, funeral trusts, or long-term care costs.
Can a Medicaid Asset Protection Trust (MAPT) Help?
Yes—placing property in a MAPT before applying can protect it from asset limits and estate recovery, but must be done well ahead of time due to the Look-Back Rule.
Should You Get Professional Medicaid Planning Advice?
Absolutely—rules are complex, vary by state, and mistakes can lead to denial. Certified Medicaid Planners can help safeguard eligibility while protecting property.
