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DEPARTMENT FOR AGING AND REHABILITATIVE SERVICES AUXILIARY GRANT PROGRAM NON-SSI INCOME SOURCES 07/19 CHAPTER I, PAGE 68

54.1. Income Treatment Net rental income, gross income minus expenses, is unearned income unless the individual is someone who is in the business of renting properties. If the individual is someone who is in the business of renting properties, the income is earned income from self-employment. If it is determined the rental income is self-employment, use the section under Self-employment in Chapter I – 58 to evaluate it. This section applies to unearned rental income. Unearned rental income is subject to the unearned and general income exclusions. 54.1.1. Rental Deposits Rental deposits are not income to the landlord while subject to return to the tenant. Rental deposits used to pay rental expenses become income to the landlord at the point of use. 54.1.2. Computation Unearned net rental income is determined by subtracting the ordinary and necessary expenses of doing business from the gross rental income. • Determine gross rent received and deductible expenses month - by - month. • Subtract deductible expenses paid in a month from gross rent received in the same month. • If deductible expenses exceed gross rent in a month, subtract the excess expenses from the next month's gross rent and continue doing this as necessary until the end of the tax year in which the expense is paid. • If there are still excess expenses, subtract them from the gross rent received in the month prior to the month the expenses were paid and continue doing this as necessary to the beginning of the tax year involved. Note: Do not carry excess expenses over to other tax years nor use them to offset other income.