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ISSUE DATE: 02/2016

Rental property is property the client owns and rents to others. This may include separate living quarters in the same building, such as a duplex. For information on rental income from people living with the client, see 0017.15.33.27 (Self-Employment Income From Roomer/Boarder). Also see 0017.15.33.03 (Self-Employment, Convert Inc. To Monthly Amt).


Count income from rental property as earned income and allow earned income disregards. See 0018.18 (Earned Income Disregards). For information on budgeting Self-Employment Income, see 0017.15.33.03 (Self-Employment, Convert Inc. To Monthly Amt).


Calculate Rental Income using the policy information below after first determining whether it is earned or unearned income. Count income from rental property as earned income when the unit spends an average of 20 hours or more per week maintaining or managing the property. Otherwise count it as unearned income.

Deduct allowable expenses from both earned and unearned rental income to get gross rental income. Allow earned income disregards only for earned rental income. See 0018.18 (Earned Income Disregards).

Allowable expenses for rental property include:

Real estate tax.




Upkeep and repairs.

Tax return preparation fees.

License fees, franchise fees, professional fees and professional dues.



Attorney fees allowed by the IRS.

Payments on the principal of the purchase price of income-producing real estate.

When the client lives on the rental property, determine the rental property ratio. Divide the number of rooms or square footage that the client rents out by the total number of rooms or square footage in the building. To determine the portion of an expense that is an allowable deduction, multiply the expense by the ratio.

Do not allow as a self-employment expense:

Federal, state, and local income taxes.

The employer's own share of FICA. This does not include the share the employer pays for an employee.

Money set aside for the self-employed person's own retirement.

Work-related personal expenses.

Net loss from another period.

Charitable contributions.


Wages or other benefits a sole proprietorship pays to a unit member as a business expense.

Personal business and entertainment expenses.

Cost of meals.

Credit Card payments, including interest charges.


For SSI recipients, SSA determines income. No county action is required.

For non-SSI recipients, follow GA.


Follow MSA for aged, blind, or disabled clients. Follow GA for all other adults.

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