Individuals seeking Supplemental Security Income (SSI) must meet strict guidelines regarding asset and income limits.
In a recent case, I had a client whose eligibility for SSI was in question because she owned a duplex. She was living in one side while renting out the other. The judge argued that she had too much income to be eligible for SSI while I argued that under Social Security’s rules her rental income should not disqualify her from receiving SSI.
Rental income is considered “unearned income” and Social Security counts all but the first $20 against your monthly benefit amount for SSI. This means if someone gets more than $753 in net rents, they would not be eligible for any of the standard $733 SSI benefit that month.
I mentioned “net rents” because Social Security has rules that allow landlords to subtract out some specific “carrying costs” related to home ownership, and offset those costs against the rental income to calculate the net countable rental income.
- Interest and escrow portions of a mortgage payment;
- real estate insurance
- repairs;
- property taxes;
- lawn care;
- snow removal;
- advertising for tenants; and
- utilities.
This means if my client was receiving $1500 in rent each month from her tenant, but was spending $450 each month on interest and escrow charges, $90 on homeowners insurance, $375 on property taxes and $100 on utilities for the rental unit, she would have $1015 of deductible expenses.
This would mean the $1500 rent would actually only result in a $485 countable unearned income. This would leave my client with a monthly SSI benefit of $268, and ongoing SSI eligibility if she meets all other other asset and income rules.