Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) programs through the Social Security Administration (SSA) support millions of Americans. In fact, reports from the SSA state nearly 9 million people receive SSDI benefits while about 7.5 million receive SSI payments. If you’re earning rental income from properties you own, you might be wondering how this extra income could impact your Social Security benefits. Whether or not this passive income affects your benefits depends on which kind of disability benefits you receive. Understanding the relationship between rental income and Social Security is crucial for making informed decisions about your financial future.
SSDI vs SSI and Rental Income
As mentioned, SSA provides two kinds of benefits: Social Security Disability Insurance and Supplemental Security Income. SSDI benefits are determined based on your prior work history, whereas SSI benefits are provided to eligible individuals with extremely low income and few resources. SSDI and SSI have limits to either income or savings, respectively. Earning rental income or the amount of rental income earned may impact your ability to collect SSDI or SSI.
Passive Income vs. Earned Income
Rental income is almost always considered passive income. Passive income, also called unearned income, requires minimal effort to receive and maintain. As such, passive income is not considered earned income, which is earnings from paid wages. If you do not participate directly in the business activities related to the income in a material way, that income is likely passive.
Can You Own Rental Property While On SSDI?
If you own a rental property, your SSDI benefits will most likely not be impacted. Only earned income will affect your benefits. However, depending on your level of involvement, the SSA may consider income through your rental properties as earned income. For example if you: perform services for a tenant beyond the normal care and maintenance of the property; receive rental income as a real estate dealer; or you participate materially in a farming operation, SSA will consider any money you earn from rental properties as earned income. Consider hiring property managers and maintenance workers to take care of your rental property and ensure anything you do regarding the property is not considered work that could qualify your rental income as earned.
As mentioned, the SSDI program does not put a limit on the amount of unearned income you can receive and still qualify for benefits. Therefore, your eligibility will not be affected by other forms of passive income, such as cash gifts, investments, or inheritances, even if you receive them after you have been approved for benefits. However, if the SSA determines the money you collect from your rental properties is earned income, you will be subject to substantial gainful activity (SGA) limits. For 2024, statutorily blind individuals cannot earn more than $2,590 per month, while non-blind individuals cannot earn more than $1,550 per month. If you reach the SGA threshold, you will no longer be considered disabled.
Can You Own Rental Property While On SSI?
SSI has strict limits on assets and resources. If you own a rental property, you will very likely be disqualified from receiving SSI benefits. This is because, under SSI, you cannot own more than $2,000 in assets as an individual or $3,000 in assets if you are part of a married couple. If the rental property doesn’t automatically disqualify you, the amount of money you receive in benefits will decrease if your unearned income exceeds $20 per month or your earned income exceeds $65 per month.
Some exceptions regarding SSI and rental properties do exist. The main exception exists for individuals who became disabled before the age of 26. These individuals may be able to set up an Achieving a Better Life Experience (ABLE) account to shield up to $100,000 from SSI’s resource limit. ABLE accounts can only be used to pay for qualified, disability-related expenses, such as education, housing, and medical care. If, however, the value of the property you own and any money you have not in the ABLE account exceeds the SSI income and resources limits, you will likely be denied SSI benefits or have your existing SSI benefits terminated.
When to Speak to an SSDI or SSI Attorney
If your financial situation changes, you are required by law to notify the SSA if you receive either SSDI or SSI benefits. Failing to report financial changes will likely impact your benefits. If you are concerned about maintaining your existing benefits, contact Jeffrey Freedman Attorneys. Our SSDI and SSI lawyers can advise you on available options.