SNAP Households with Rental Income: Why the SNAP Math Matters!

FoodSNAP
10/18/12

We've received a number of inquiries on how to calculate rental income received by SNAP households who have tenants in their, including many elders who are "empty nesters" who have rented out a portion of their homes, as well as working families who have multi-family residences or "in-law" apartments rented out. Many low income home owners have high shelter costs due to large initial mortgages, refinancing and/or home improvement loans. The combination of mortgages, real estate taxes, insurance as well as water/sewer and other costs make it hard to make ends meet. 

Federal and state SNAP rules treat rental income as a form of "self-employment" unearned** income. This means the SNAP household can deduct the costs involved in property ownership to calculate the net rental amount used in the SNAP math. Most households are better off when home ownership costs costs are deducted up front.
 
How to calculate NET rental income?

Step 1: Determine pro rata share of expenses. Add up total home ownership costs - including water/sewer and other common utilities paid by the homeowner. Divide that by number of units in the property, in a two family house, divide home ownership costs in half.

Step 2:  Subtract the pro rata share of total property costs from the gross rental income - the monthly rent paid by the tenant. This is "unearned income" to the SNAP applicant.*  

Step 3:   Calculate the SNAP household’s shelter costs for the SNAP math:  This time, calculate homeowner’spro rata share of home ownership costs but NOT utilities. The water/sewer, garbage costs are utility costs covered by the Standard Utility Allowance (SUA) in addition to electricity, phone and other utilities). Add the heating/cooling Standard Utility Allowance to the home ownership costs (excluding the common utilities mentioned).

Attached are 2 SNAP Rental Income fliers, prepared with the help of MLRI's AmeriCorps volunteer, Vicky Negus, that help explain why the SNAP math matters in both elder/disabled households and working families.The regulations citing these policies are at the bottom. Properly calculated rental income can make a significant difference for SNAP applicants who are trying to hang onto their homes. Let us know if you see any problems with the SNAP math and rental income !! 

 * Note: Rental income is generally unearned income unless the owner "actively engaged in the management of  the property an average of at least 20 hours a week" - which is unusual. 106 CMR 363.220(B)(5)

REMINDER:  The Next Food SNAP Coalition Meeting is Tuesday, October 23rd from 10 to Noon at St Francis House. 

 

Attachment Size
Rental Income - Family and child HH #2_0.pdf (75.52 KB) 75.52 KB
Rental Income - Example elderly HH #2_0.pdf (72.26 KB) 72.26 KB