71. How is rental income treated?

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, or proportional share of the mortgage and home ownership costs from the rental income. The rest will be counted as unearned income.

Example: Verdina rents out two units in the triple-decker house she bought in 1970s. Each tenant pays for their own utilities. She receives $1,200 a month for each unit and pays $3,000 a month to the bank for mortgage, interest and insurance on the building. Verdina also pays $300 in water/sewer and trash collection for a total of $3,300 in monthly expenses. She can deduct two-thirds (or $2,200) of the monthly homeownership expenses from her rental income (for the two units she rents) to determine the countable rental income for SNAP purposes. She has only $200 in countable rental income and not $2,400.

Note: In this example, when Verdina applies for SNAP benefits, she has only $200 in rental income. She can claim her one-third of mortgage related costs for her pre-utility shelter expenses (1/3 of $3,000, or $1,000) 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, which is added to her third of the mortgage/insurance costs.

If you are the primary tenant of an apartment (vs a homeowner) and you are subletting rooms to others, it's best if 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 Online Guide

See Appendix G for links to the DTA's BEACON Online Guide for this section.