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Income received from the rental of real estate is considered earned taxable income and is included in the calculation of MAGI for determining household income. Expenses related to rental income that can be deducted when calculating MAGI include all allowable IRS deductions such as: • Depreciation • Advertising • Auto and travel expenses • Commissions • Insurance • Interest • Legal and other professional fees • Local transportation expenses • Management fees • Mortgage interest paid to bank • Taxes • Utilities • Repairs to keep property in good working condition but do not add value • Operating expenses • Uncollected rents (cannot deduct if a cash basis taxpayer – only report actual cash collected). 2875.05.10 RENTAL INCOME (MED 1, 2, 4)

Rental income that is payment for the use of real or personal property is unearned income. Rental payments may be received for the use of land (including farmland), for land and buildings, for a room, apartment, or house, or for machinery and equipment. Another type of rental situation occurs when an individual owns multiple rental units, so that he is administering a rental business. That situation is considered self-employment, and the resulting income is earned income. Refer to IHCPPM 2810.30.00 2875.10.00 INCOME FROM CONTRACT SALES Income from land contract sales is paid in installments. The following sections discuss the treatment of payments from contract sales. 2875.10.05 INCOME FROM CONTRACT OR INSTALLMENT SALES (MED 3)