Rental, Roomer, and Boarder Income SNAP
Income from roomers, rental property, or boarders of a commercial boarding house is considered self-employment income.
For SNAP purposes, you must explore if the living space has its own separate kitchen facilities to determine if the income is considered rental or roomer income. If the living space has its own kitchen facilities then it is considered rental income. If it does not have its own kitchen facilities, and it is not a shared living situation, then it is considered roomer income.
Rental Income
Income from rental property is considered earned income and entitled to the earned income deduction if a household member is actively engaged in the management of the property an average of 20 hours per week or more. For SNAP only clients, if the household member is managing the property less than an average of 20 hours per week, the income must be considered unearned. For TAFDC and EAEDC clients, see Real Estate Income – EAEDC and/or Real Estate Income – TAFDC.
When calculating a household’s income from a rental property, you must:
- determine the monthly rental income received from tenants
- subtract the Cost of Doing Business (CODB)
- prorate the CODB by the number of units
- The result of this calculation is the household’s countable income.
Example: A SNAP client owns a three family house. She occupies the first floor and rents the second and third floor apartments for $1000 a month each. The tenants are responsible for their own utilities. The client’s mortgage expense includes principal of $300, interest of $1500, taxes of $300, and homeowner’s insurance of $400 per month. The water and sewer fee is $300 per month
| Allowable costs | Monthly Amounts | Number of Units (3) Proration |
Tenant’s share Cost-of-doing-business |
|---|---|---|---|
|
Principal Interest Taxes Insurance Water/Sewer Fees Total |
$300 $1500 $300 $400 $300 |
$300 ÷ 3 = $100 $1500 ÷ 3 = $500.00 $300 ÷ 3 = $100.00 $400 ÷ 3 = $133.33 $300 ÷ 3 = $100.00 $933.33 |
$100.00 x 2 = $200.00 $500.00 x 2 = $1000.00 $100.00 x 2 = $200.00 $133.33 x 2 =$266.66 $100.00 x 2 = $200.00 $933.33 x 2 = $1866.66 |
Cost of Doing Business = $1866.66. Total rent collected of $2000.00 – $1866.66 (CODB) = $133.34 in countable income.
Determining Shelter Expense for the Home Owner (Client)
The home owner’s shelter expense is calculated by adding the pro-rated share of the Principal, Interest, Taxes, and Insurance amounts. Water/Sewer Fees are excluded from the total as the appropriate corresponding SUA deduction is utilized instead. Based on the example above, the home owner’s shelter expense would include the prorated share of Principal ($100) + Interest ($500) + Taxes ($100) + Insurance ($133.33) = $833.33 total. No credit is given for the water/sewer fees for the shelter expense deduction.
Important: If there are changes at Interim Report or Recertification, you must zero-out the existing income and expenses prior to entering the new amounts.
Roomers
Roomers are individuals to whom the household furnishes lodging, but not meals, for compensation. You must explore the possibility that this may be a shared living situation where two or more households split the rent for the apartment. If a household claims roomer income, you must ask the client about the living arrangement.
If all members of the household are listed on a lease and one member pays a portion of the rent to another or to the landlord directly, this is a shared living situation. If the landlord is unaware that another person is living in the apartment, and that person pays rent directly to the primary tenant, it is most likely a roomer situation.
If it is determined that there is roomer income, the total payment is considered earned income.
Roomer Income Expenses
Clients are allowed to claim reasonable expenses for roomer income.
For example, the client may provide the roomer with cleaning supplies or toiletries as part of the living arrangement. The client can deduct these costs if the expense claimed is reasonable in amount and frequency.
Another example is if the household’s cable/internet bill equates to $100.00 per month and the household has one roomer, we can divide the monthly amount by two and deduct $50.00 from the Roomer Income as a business expense. However, we cannot apply this logic towards shelter or utility bills that the household is credited for in the shelter and standard utility allowance deductions.
Boarders
The income a household receives from a boarder, other than that received by a household who owns and operates a commercial boarding house, is considered self-employment income. Boarders are different from roomers because they have meals provided to them. All direct payments to the household for room and meals, including contributions to the household’s shelter expenses, must be considered earned income available to the household.
Boarders are ineligible to participate separately from the household providing lodging and meals. Boarders may participate as members of the household providing these services and at the request of the providing household.
Note: A roomer is a person who rents a room or rooms in which to live. A boarder is a person who pays rent and a stipulated sum of money in return for regular meals and lodging.
Cost of Doing Business
The cost of doing business (CODB) for boarder income is determined by using the maximum benefit amount for the household size (that is equal to the number of boarders) or if the actual cost exceeds the maximum benefit amount, by using the actual cost of providing lodging and meals. If actual costs are used, only separate and identifiable costs of providing lodging and meals for boarders are allowed.
Any income in excess of the CODB is countable earned income.
Boarders who are not members of the SNAP household must be excluded from the SNAP calculation entirely.
Important: The amount allowed as a CODB cannot exceed the amount of the payment the household receives from the boarder.
Deductible Expenses
The household’s countable self-employment income from boarders (after excluding the cost of doing business) is added to any other earned income before BEACON applies the earned income deduction. Shelter costs for households with boarders must not include any shelter expenses paid by the boarder directly to a third party, such as the landlord or utility company.
Commercial Boarding House
Residents of a commercial boarding house are not eligible for SNAP benefits. A commercial boarding house is defined as an establishment that is licensed as a commercial enterprise, and offers meals and lodging for compensation. In cities and towns without licensing requirements, a commercial boarding house is defined as a commercial establishment that offers meals and lodging for compensation with the intent of making a profit. The number of boarders residing in a boarding house shall not be used to determine if a boarding house is a commercial enterprise. The household of the owner of a boarding house may apply for SNAP benefits as a household separate and apart from the residents of the boarding house.