Client in a nursing home has a life estate interest in a farm and a house in town. The house in town is not being rented out, but a grandson is living there rent free. The farm is being rented out for an annual cash rent total of $8,000. There is a copy of this cash rent agreement in the case file. The real estate taxes on the farm are $1,500 per year. The insurance on the farm is $500 per year.
We do not allow any expenses on the house in town because it is not producing any income.
The farm net income is:
$8,000 cash rent - $2,000 (taxes and insurance) = $6,000 divided by 12 = $500 per month.
Total countable monthly unearned life estate income is $500 per month.