RENTAL INCOME (FSM)

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Payments received for rental of apartments, land, or other property.

Rental income that is the result of services performed by the individual is considered self-employment income. See Self-Employment.

Rental income is considered self-employment income when it results from services performed by the individual for at least an average of 20 hours per week. Reduce the rental income by the cost of doing business. If the individual is renting out a portion of their own home, prorate the costs to determine the roomer’s portion. See Self-Employment.

Treatment: Earned Income

Example:

A woman owns a duplex and rents one side to a tenant for $500 a month, utilities included. Her cost of doing business is subtracted from the $500, so one-half of the mortgage interest*, one-half of property taxes (but not personal taxes), one-half of utilities (unless they can be separately identified, in which case use the tenant’s actual utility amounts), and one-half of insurance, can be subtracted from the $500 monthly rental income.

Rental income when no member of the household is actively engaged in management of the rental for at least an average of 20 hours per week. Reduce the rental income by the cost of doing business. Do not allow the earned income disregard.

Treatment: Unearned Income

References: 7 CFR 273.9(b)-(c), 7 CFR 273.10(d), 7 CFR 273.11(a)-(b)