Property Essential to Self-Support (PESS)

What it does: This provision allows a person to exclude certain resources which are essential to the person's means of self-support. How it works: Property which is used in a trade or business or used by a person for work as an employee is totally excluded as of May 1, 1990. For example, the value of tools or equipment which a person needs for work is totally excluded. For periods prior to May 1, 1990, the total exclusion only applied to property which was required by an employer. Up to $6,000 of equity value of non-business property which is used to produce goods or services essential to daily activities is excluded (e.g., land used to produce vegetables or livestock solely for consumption by the person's own household). Also, up to $6,000 of equity value of non-business income-producing property is excluded provided that the property yields an annual rate of return of at least 6 percent. This $6,000/6 percent rule also applies to property used in a trade or business for periods prior to May 1, 1990.

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