Self-Support Property (Garden, Livestock, Tools)

Some property helps a person support themselves: the tools of a trade, a farm, equipment used in a small business, a vegetable garden, a few laying hens, or a rental unit that brings in income. Federal SSI rules, which most states follow for Long-Term Care Medicaid, call this property essential to self-support and exclude some or all of it from the asset count. This guide explains the categories, the limits and how the rules apply to older adults who need long-term care.

Figures change periodically. Double-check current amounts before relying on them.

Why this exclusion exists

The SSI and Medicaid asset limits are low, often $2,000 for a single person in 2026. Without a special rule, a person who earns a modest living from a small farm or a trade would have to sell the very property that supports them to qualify. The self-support exclusion lets people keep that property, within limits, so they can continue to support themselves.

The three categories

Under the SSI rules, property essential to self-support falls into three groups, each treated differently.

1. Property used in a trade or business

Excluded regardless of value, as long as it is currently used in a trade or business.

Examples:

farmland, barns, tractors and livestock on a working farm;
a store building, inventory and equipment of an operating business;
a contractor’s truck and tools;
equipment of a self-employed person.

Business bank accounts used in the operation of the business may also be excluded, if the business is ongoing.

2. Nonbusiness income-producing property

Property that produces income but is not part of a trade or business, such as a single rental house or land leased to a farmer, is excluded up to $6,000 of equity if it produces a net annual return of at least 6% of the excluded equity. Equity above $6,000 counts. If the property produces less than 6%, it may count in full unless the shortfall is temporary and due to circumstances beyond the person’s control.

3. Nonbusiness property used to produce goods or services for daily living

Property used to produce goods or services needed for the household, such as land used for a vegetable garden or to raise livestock for the family’s own food, is excluded up to $6,000 of equity. There is no rate-of-return requirement.

Work tools for employees

Tools, equipment, uniforms and safety gear that an employee must provide for their job are also excluded while the person is employed.

Summary table

Category	Limit	Return required?
Used in a trade or business	No limit	No, but must be in current use
Nonbusiness income-producing	$6,000 of equity	Yes, at least 6% net a year
Nonbusiness, produces goods or services for daily living	$6,000 of equity	No
Employee work tools	No limit	No, while employed

“Currently used” and long-term care

The trade or business exclusion requires that the property be in current use. This matters a great deal for people entering long-term care:

If a farmer enters a nursing home and the farm continues to operate, run by a spouse or family on the person’s behalf, it may still qualify as in current use, depending on the facts.
If the farm stops operating, it may no longer be excluded as business property. It might then be treated as nonbusiness income-producing property (with the $6,000 limit) if it is leased out, or counted in full.
SSI rules allow some property not in current use to remain excluded for a period if the person expects to resume using it, often up to 12 months. State Medicaid rules may differ.

Families should look carefully at whether the business will continue and document its operation.

How the business’s income is treated

Income from self-support property is counted as income. Net earnings from self-employment are figured after business expenses. Rental income is figured after allowed expenses. See Business and self-employment income and Rental income.

Married couples

For married couples, self-support property owned by either spouse can be excluded under the same rules. If the spouse at home continues to run the farm or business, the property may remain excluded. And because all non-exempt assets of both spouses are counted together at the snapshot date, excluding business property can make a large difference in what the spouse at home keeps.

A worked example

Harold and June own a 120-acre farm. Harold, 82, has had a stroke and enters a nursing home. June, 78, continues to run the farm with help from their son, who is paid wages.

The farm: Land, equipment and livestock are used in an ongoing business. They are excluded regardless of value, as long as the farm keeps operating.
A separate rental house they own in town: equity $90,000, rented for a net $5,000 a year. That is a 5.6% return on $90,000, but the exclusion applies only to $6,000 of equity, and $5,000 is well over 6% of $6,000. So $6,000 of equity is excluded and $84,000 counts.
June’s vegetable garden plot on a separate small lot worth $4,000: excluded as property producing goods for the household.

The rental house’s countable equity, along with savings, goes into the CSRA calculation. June keeps her CSRA, the home, the farm and her car.

Common questions

Does my hobby farm count as a business? It depends on whether it is operated as a trade or business with the aim of making a profit. A few animals kept for pleasure are not a business. Tax returns showing farm income and expenses help prove business use.

What if my business loses money? A trade or business can be excluded even if it is not profitable in a given year, as long as it is a real, ongoing business.

Can I keep my late husband’s tools? If you are not using them in a trade, they may count as personal property, which is often excluded as household goods and personal effects, depending on value and state rules.

Is a vacation rental a business? It might be, if run as a business. Otherwise, it is nonbusiness income-producing property, subject to the $6,000 limit. See Owning rental property.

Do all states follow these rules? Most states use SSI rules, but some differ. Check the state guide.

Records to keep

tax returns with business schedules (such as Schedule C or Schedule F);
business bank statements;
leases and rent records;
equipment lists with values;
proof that the business continues if the owner enters care, such as sales records or payroll.

Getting advice

Self-support property rules can protect substantial value, especially for farm families and small business owners, but the details matter. A Certified Medicaid Planner (CMP) can review how the rules apply and how to document continued use.

Working through the 6% test

The 6% test for nonbusiness income-producing property often confuses people. It works like this:

Figure the equity: market value minus any loans against the property.
The exclusion covers up to $6,000 of that equity.
Figure the net annual income: rent or other income minus allowed expenses such as taxes, insurance and repairs.
If the net income is at least 6% of the excluded equity (6% of $6,000 is $360 a year), the $6,000 is excluded. Equity above $6,000 counts.
If the net income is less than 6%, the property may count in full, unless the low return is due to circumstances beyond the person’s control and is expected to improve.

Example: A small lot leased to a neighbor for $500 a year, with $100 in taxes, nets $400. The lot’s equity is $5,500. Since $400 is more than 6% of $5,500 ($330), the whole lot is excluded.

Several properties

If a person owns more than one piece of nonbusiness income-producing property, each property is tested separately for the 6% return, but the $6,000 equity exclusion is a total across all such properties, not $6,000 each.

When the person can no longer work the property

Many older adults own land they once farmed but now lease out or leave idle. Once the person stops using property in a business and it is not leased, it generally becomes countable. Options may include:

leasing it at a fair rent so it qualifies as income-producing property (subject to the $6,000 limit);
selling it at fair market value and using the proceeds within the rules;
transferring it to a spouse, which is not penalized;
for a family farm, considering whether a family member can continue it as a business.

Each option has tax and family consequences, so plan with professional help.

Business property and estate recovery

Excluding property from the asset count during life does not protect it from estate recovery after death. A farm or business that passes through the estate may be subject to a claim, although many states have hardship waivers for a family farm or business that is the main source of income for the heirs. See Estate recovery.

Last updated for 2026. General information only, not legal or financial advice. Medicaid Answers is a free educational resource published by Medicaid Answers Foundation.