WAG 08-04-01-d: Rental Income

PM 08-04-01-d.

Rental Property Is Not Part of the Homestead

Figure net rental income by subtracting the actual cost of doing business from the actual gross rental income.

Rental expenses include:

• taxes,
• principal and interest payments,
• insurance,
• repairs, and
• utilities

paid by the landlord.

Multi-unit Property Includes Homestead

1. Base the prorated share on the number of rental units in the building.
2. Figure net rental income by allowing as rental expenses a prorated share of:
   • taxes,
   • principal and interest payments,
   • insurance,
   • repairs, and
   • utilities.

     NOTE: Allow as shelter costs for the FS unit: 

   • FS unit's share of principal and interest on mortgage, taxes, and insurance, and
   • the Air Conditioning/Heating Standard.

Single Family Unit

When the FS unit rents out a portion of its dwelling and expenses cannot be separately identified:

1. Figure the rental expenses by:
   • adding housing and utility costs (drop cents),
   • divide the total costs by the total number of rooms in the dwelling (dropping cents), and
   • multiply the per room cost by the number of rooms being rented out. 

     Example: Total housing and utility costs are $400. There are 8 rooms in the dwelling and 3 are rented out. Figure rental expenses:

     $400 ÷ 8 rooms = $50 X 3 rooms = $150 expenses.

   1. Use actual utility expenses. Do not use the Air Conditioning/Heating Standard to figure business expenses.

      NOTE: Allow the Air Conditioning/Heating Standard as a shelter expense when figuring the FS unit's shelter costs deduction. 

2. Figure net rental income by subtracting rental expenses from gross rental income received for the budget month.