How is rental income treated?

We are in the process of updating the SNAP Advocacy Guide, so some of the information is no longer current.  In the meantime, you can read or download a pdf of the 2022 guide from www.masslegalservices.org/FoodStampSNAPAdvocacyGuide

Produced by Patricia Baker and Victoria Negus, Massachusetts Law Reform Institute
Reviewed January 2020

The net amount of rental income you receive – after the costs of homeownership or lease of a building – is countable unearned income. It is earned income only if you spend more than 20 hours a week managing and maintaining property. 106 C.M.R. §365.930(A), 106 C.M.R. §363.220(B)(5)

Homeownership costs include what you pay on a mortgage (principal and interest), homeowner’s insurance, property taxes, water and sewer charges, repairs, trash collection, utilities shared by the entire home, etc. 106 C.M.R. §365.930(A)(1), 106 C.M.R. §365.940

If you own your home and rent out a room or apartment, you can deduct a pro rata (proportional)share of the mortgage and homeownership costs from the rental income. The rest will be counted as unearned income.

Example:

Verdina is age 72 and rents out two units in the triple-decker house she bought in the 1970s. Each tenant pays their own utilities. She receives $500 a month for each unit and pays $1,200 a month to the bank for mortgage, interest and insurance on the building. Verdina also pays an average of $90 a month for water/sewer and trash collection for a total of $1,290 in monthly expenses. She can deduct two-thirds (or $860) of the monthly expenses from her rental income (for the two units she rents) to determine the countable rental income for SNAP purposes. She has only $140 in countable rental income and not $1,000.

Income (rent paid) from Verdina’s two rental units =

$1,000

2/3 of Verdina’s homeownership costs (2/3 of $1,290) =

- $860

Countable rental income for Verdina ($1000 less $860) =

$140

 

Note:

In this example, when Verdina applies for SNAP benefits, she has only $140 in rental income. She can claim one-third of mortgage related costs for her shelter expenses (1/3 of $1,200, or $400) but not the full amount of the total homeownership costs. Her portion of the water/sewer and the trash collection are covered by the standard utility allowance (SUA, $646), which is added to her third of the mortgage/insurance costs ($400).

Advocacy Reminders

  • If you are the primary tenant of an apartment, it is recommended that each tenant make a payment to the landlord directly. This can avoid errors in SNAP calculations and erroneous counting of income if you are merely passing through rental income to the landowner.

DTA Online Guide Sections:SNAP > Eligibility Requirements  > Income > Self-Employment >

Show DTA Policy Guidance

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