How to Determine Rent if You Live with the Homeowner (SSI Regulations)

0b6903eb859f0c6e8f8fbaf5404f59e9--water-colors-flower-artIf you are renting a room and you live with the person who owns the home, it is a little complicated to figure out how much rent Social Security expects you to pay. Read this page if:

  • You live with your parents and your parents own the home
  • You live with your friend and your friend owns the home
  • You live with another family member who owns the home
  • You rent a room in someone’s house and the landlord lives there

These regulations apply to SSI only. There are no rent regulations for SSDI.

What’s a Household?

First it may be helpful to know that every program has a different way of defining “household.” It is possible that you can live with another person but be a separate household. Strange but true!

For SSI, you are going to want to figure out if Social Security will consider the people you live with to be “one household” or “multiple, separate households”.

Step one: One household or multiple households?

For SSI, if you live with other people and they are part of your “economic unit”, then you are all one household together. On the other hand, if you live with other people and then are not part of your “economic unit” then you are multiple, separate households.

What is an economic unit? And how do they decide if you are one household or multiple households? Here is a list of questions they might ask to decide if you are a separate household from the people you live with: Social Security Policy for Determining a “Separate Household”

Step two: Determining Rent

🌷SINGLE HOUSEHOLD: If your household is a single household, you would pay your share of the Household Expenses. Example: Daisy lives in a house owned by her mom. They add up all the household expenses: The mortgage, property tax, insurance, gas / heat, electricity, water, sewer, and garbage total $1,200. Daisy is responsible for half. She does not actually pay half of each of these things, instead she makes a rental agreement to pay her mom rent of $600. They look online for a sample of a lease and print and sign a simple lease agreement. Daisy pays for her own food (though her mom does the shopping).

🌷MULTIPLE, SEPARATE HOUSEHOLDS: If your household is a separate household, you would pay rent for the space you are living in. Your rent should be set at “Fair market value” (average rent for a similar space in your area). Example: Daisy lives in a house owned by her mom. Her mom determines that rent in her area is typically $500 for a room including utilities. Daisy and her mom sign a rental agreement for $500 and every month Daisy gives her mom a check for rent. Daisy pays for her own food (though her mom does the shopping).

Extra Bonus Question

This bonus question can be asked to anyone, but is more likely to come up if the homeowner is a relative.

Social Security may ask the homeowner if they are giving you discounted rent. This is especially common for adult children who are renting a room in a house owned by their parents.

For family members, homeowner may be asked to sign a statement verifying how much they would charge a stranger and asking if they are charging you the same amount of rent they would charge any other person. If they are charging you less than another person would be charged, your SSI may be lowered. In addition, they will also consider the rules below to make sure you are paying your fair share:

When Mortgage is Super High

In some situations, the mortgage may be so high, there is no possible way that the person on SSI can pay their fair share.

In this case, you may still have the option to use the Fair Market Value system to set your rent. Or you have to option to pay the amount you can, and your SSI will be somewhat reduced.

Using ABLE Accounts to Pay Rent

Another option is if you have any funds in an ABLE account.

ABLE accounts can be used to pay rent and utilities. According to the SSI rules, you should not use ABLE accounts to pay for food (ABLE may allow you to pay for food, but SSI may lower your check if you do this).

Anyone can contribute gifts into your ABLE account (friends, family members, etc)

About ABLE Accounts

Using Special Needs Trusts to Pay Rent

Special Needs Trusts cannot be used for rent and utilities and food. However, they can be used for other purchases, freeing up more of your SSI check to pay rent.

If Homeowner is Not Related To You

For example: You are renting a room from a friend or stranger.

There is a chance Social Security will automatically consider you separate households, unless you request this to change and show otherwise.

If Homeowner is Related to You

For example: You are renting a room from your parents, and they own the house.

There is a chance Social Security will automatically consider you one household, unless you request this to change and show otherwise.

If Homeowner if Your Boyfriend or Girlfriend

There is a chance that Social Security will ask you questions to determine if you are “holding out as married” which could have a big impact on SSI, or cause your check to stop. Learn more on this page: How to Handle an SSI Interview (PERC)

If Homeowner Does Not Want to Collect Rent

Sometimes a homeowner does not wish to collect rent, but would like their tenant to pay other bills instead.

This is an obscure Social Security policy stating that a person may pay for other types of bills in place of rent. For example, paying more than your share of utilities, car insurance for a car you do not use, or other bills.  It will help a lot  and there is a clear written agreement about this arrangement. We do not know how the IRS will treat this kind of arrangement. If you want to try, here is the policy:

Tips for Separate Households and Fair Market Value

If your home is owned by a family member, the SSI case worker is likely to automatically consider you a single household, unless you show otherwise.

Some people find it helpful to present to SSA a signed letter from the homeowner stating that rent is set at fair market value. Sample letter: “I have researched rentals in my neighborhood and determined that $X is fair market rent for the space that is being rented. This is the same rent I would charge any other tenant for this space.”

It can also be helpful if you present a signed statement from you confirming that you are functioning as a separate household. Sample statement: “In my current living situation, I am a separate household and separate economic unit. My rent is set at presumed market value. Please process my rent according to the policies in SI 00835.120 Rental Liability as LA Basis.” If you wish, you can also bring a copy of the policy.

You can also look through the policy for Determining a “Separate Household” to see what questions they might ask. You can bring your written answers to these questions to the interview if you wish.

Here’s how Julie handled this situation: “When the SSI case worker asked me for mortgage information, I did not give this information, but instead explained that we were following the rental liability policy and mortgage information is not included in the calculations. I presented my documents showing I was paying fair market value. She accepted this without any issues.”

Tips for Food Stamps 

Food stamps has totally different rules than SSI. Food stamps does not care what category SSI puts you in. But they do care what is written in your lease about food and they do care who you share food with. Two things it may help to know:

🌷 If you share food with other people you live with, your food stamps may be lowered or denied.

🌷 If your utilities are included in your rent, your food stamps will often be lowered and sometimes denied.  

🌷 If you are a parent of a child with disabilities, when your child turns 22, she may be eligible for her own food stamps account. However, this is only possible if her food is separate.

🌷 Example #1: Suzy lives with her mom. She pays $400 for rent. Utilities are included in the rent. She shares food with her mom. Suzy applies for food stamps and gets $10/month.

🌷 Example #2: Suzy lives with her mom. She pays $300 for rent plus an average of $100 for utilities. She does not share food with her mom. Suzy applies for food stamps and gets $200/month.

Learn more about the Food Stamps Regulations.

If You Feel They Are Not Processing Your Case Correctly

You have a few options:

🌷 You can print and bring a copy of the policy directly from the SSA Policy Manual to show them (sometimes people who work at Social Security don’t know all the regulations).

🌷 You can also request a new SSI determination interview

🌷 You can ask to speak to a supervisor who has more knowledge of the policies

🌷 You can ask if the office has a “technical expert” for SSI issues and if you could speak to that person or if that person can review this issue.

🌷 You can ask how to request reconsideration or appeal their decision (ask for a written form)

🌷 You can congressperson’s office and ask them to inquire on your behalf to make sure policies are correctly followed.

Jake and Suzy

Jake is disabled and lives with his mom. Suzy is disabled and lives with her mom. By a remarkable coincidence, both Jake’s mom and Suzy’s mom have the exact same mortgage and utilities! Yet Jake and Suzy pay completely different rent. How? Why? Jake and Suzy Rent Examples

Learn More

Social Security has some special policies about rent: How Much Rent to Pay on SSI