How is rental income treated?

Produced by Patricia Baker and Victoria Negus
Reviewed January 2018

The net amount of rental income you receive - after the costs of home ownership 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)

Home ownership costs include what you pay on a mortgage (principal and interest), home owner 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, or proportional share of the mortgage and home ownership costs from the rental income. The rest will be counted as unearned income.

Example: Verdina is an elderly widow and rents out two units in the triple-decker house her deceased husband bought in 1980. Each tenant pays for their own utilities. Verdina lives in the third unit. She receives $500 a month for each unit. She pays $1,200 a month to the bank for mortgage, interest and insurance on the entire 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 home ownership 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 her one-third of mortgage related costs for her shelter expenses (1/3 of $1,200, or $400) and 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, $636), which is added to her third of the mortgage/insurance costs ($400).

Advocacy Reminders:

  • If you are the primary tenant of an apartment and receive rental payments directly from your tenants, you can deduct a pro-rata share of the rental costs from the rent you receive from that rental income you report to DTA. However, sometimes it is better and easier for each tenant to 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 Policy Guidance:

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

Show DTA Policy Guidance

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