{"id":7924,"date":"2023-06-07T17:11:58","date_gmt":"2023-06-07T17:11:58","guid":{"rendered":"https:\/\/imsfund.com\/?p=7924"},"modified":"2023-06-07T17:11:58","modified_gmt":"2023-06-07T17:11:58","slug":"rental-income-and-child-support","status":"publish","type":"post","link":"https:\/\/imsfund.com\/index.php\/2023\/06\/07\/rental-income-and-child-support\/","title":{"rendered":"Rental Income and Child Support"},"content":{"rendered":"<p> <br \/>\n<\/p>\n<div :class=\"{ 'hidden': $store.proContent.showFullPrompt() }\">\n<section class=\"px-4 relative border border-slate-200 mobile-toc lg:hidden\" x-data=\"{open:false}\">\n<button class=\"flex items-center gap-4 my-2 border-none w-full\"><br \/>\n<svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"h-6 w-6\" fill=\"none\" viewbox=\"0 0 24 24\" stroke=\"currentColor\" stroke-width=\"2\"><path stroke-linecap=\"round\" stroke-linejoin=\"round\" d=\"M4 8h16M4 16h16\"\/><\/svg><\/p>\n<h2 class=\"font-semibold text-slate-800 text-base m-0 js-toc-ignore\">In this article<\/h2>\n<p><\/button><\/p>\n<\/section>\n<p>So, the day has come to finally figure out how much your rental property income will affect your child support payment. You won\u2019t be surprised that many states consider that pretty penny a critical component when calculating these payments.<\/p>\n<p>As with any financial analysis, it\u2019s essential to understand how to break down the numbers, especially regarding child support. In most cases, parental income is calculated in its entirety. You\u2019re going to have to provide proof of all of your finances. For rental property owners, the court will pay particular attention to the total net income of your rental.<\/p>\n<p>So, how is rental income calculated, and how does that play into child support payments? We\u2019ll give you the low-down on figuring out your rental income so that you can prepare yourself somewhat for the road ahead.<\/p>\n<h2>What Gets Calculated in Child Support Payments<\/h2>\n<p>The main factor that gets calculated in child support payments is parental income\u2014the total amount of any salary or wages. This salary includes both taxable and non-taxable income.<\/p>\n<p>The formula for calculating child support payments can vary depending on your state. When determining gross income, many factors can come into play besides salary. These factors may include:<\/p>\n<ul>\n<li>Rental income<\/li>\n<li>Business income<\/li>\n<li>Work bonuses<\/li>\n<li>Pensions<\/li>\n<li>Investments<\/li>\n<\/ul>\n<p>One thing to note is that many states allow for deductions from gross income for things like:<\/p>\n<ul>\n<li>Property taxes<\/li>\n<li>Union dues<\/li>\n<\/ul>\n<p>Aside from monetary obligations, some states also factor in the following:<\/p>\n<ul>\n<li>How much time the child spends with each parent<\/li>\n<li>Costs associated with health insurance<\/li>\n<li>The age of the child<\/li>\n<li>Childcare costs<\/li>\n<\/ul>\n<h2>How To Calculate Rental Income For Child Support<\/h2>\n<p>If you\u2019re wondering how to calculate total rental income for child support purposes, the payments are based on several factors, but in a nutshell, here are the top three steps that should take place.<\/p>\n<h3>Determine gross income<\/h3>\n<p>First, <a href=\"https:\/\/www.biggerpockets.com\/blog\/rental-property-cash-flow-analysis\" target=\"_blank\" rel=\"noreferrer noopener\">how much cash<\/a> is the rental property bringing in? Let\u2019s use $1,000 in rent for each month as an example. At the end of the year, we have a total of $12,000 in gross rental income. We\u2019ll remember this number as we move on to the next step.<\/p>\n<h3>Factor In deductible expenses<\/h3>\n<p>Yes, you can factor expenses into the equation. To make things simple, let\u2019s consider the following expenses:<\/p>\n<ul>\n<li>Rental property taxes: $500<\/li>\n<li>Repairs and maintenance costs: $1,000<\/li>\n<li>Utilities: $1,200<\/li>\n<li>Property management fees: $2,500<\/li>\n<\/ul>\n<p>In this case, the total allowable expenses are $5,200. However, there are still some expenses associated with the property that you can deduct from your gross income, such as your mortgage\u2019s tax and interest. Let\u2019s hold on to that $5,200 as we move on to the next step.<\/p>\n<h3>Calculate net rental income<\/h3>\n<p>You want to deduct the total allowable expenses from the gross rental income to determine your net rental income. Based on the examples above, we would use the $12,000 gross rental income minus $5,200 of total allowable expenses, equaling $6,800 in net rental income. So, the $6,800 would be used in the calculation to determine the child support amount.<\/p>\n<p>Remember that the amount of child support will vary based on your state. It\u2019s always a good idea to consult with a family law attorney or child support professional for guidance on accurately <a href=\"https:\/\/www.biggerpockets.com\/rental-property-calculator\" target=\"_blank\" rel=\"noreferrer noopener\">calculating rental income<\/a> and child support payments.<\/p>\n<h2>Check Your Local And State Laws<\/h2>\n<p>Child support will be calculated differently depending on the state where you live. Often, states will provide child support calculators, which are a great starting tool for those strictly looking for an estimation; these calculators tend not to get into the nitty-gritty of finances, however, as they don\u2019t factor in your specific circumstances. When looking into your <a href=\"https:\/\/www.biggerpockets.com\/blog\/landlord-tenant-laws\" target=\"_blank\" rel=\"noreferrer noopener\">local and state laws<\/a>, here are a few formulas or models that you might see:<\/p>\n<h3>The Income Shares Model<\/h3>\n<p>Forty-one states use the income shares model. So, think of this model as the financial life a child would receive had the parents stayed together. For this, you\u2019ll use both parents\u2019 incomes.<\/p>\n<h3>The Melson Formula<\/h3>\n<p>Three states use this model: Delaware, Hawaii, and Montana. Think of this as a more extreme version of the income shares model. This formula incorporates additional factors and expenses, many designed to consider parents\u2019 financial needs.<\/p>\n<h3>The Percentage of Income Model<\/h3>\n<p>Last but not least, six states (Alaska, Mississippi, Nevada, North Dakota, Texas, and Wisconsin) use the percentage of income model. This is a flat or adjusted percentage of the non-custodial parent\u2019s income.<\/p>\n<h2>Rental Income And Child Support Payments FAQs<\/h2>\n<p>Here are people\u2019s top questions when calculating rental income and child support payments.<\/p>\n<h3>Does child support count as income for renting?<\/h3>\n<p>It depends. This is an ongoing debate amongst landlords because there is a risk of the recipient of the child support not being paid at all\u2014it happens quite a bit.<\/p>\n<p>If you are a landlord considering counting child support as income, you want to look at the things like the court order and when payments are received. When it comes down to it, let\u2019s say that the child support income is less reliable than you initially thought, and you decide to evict a tenant and collect the balance due. Will the state allow you to garnish the amount as normal income?<\/p>\n<p>Since the <a href=\"https:\/\/www.irs.gov\/faqs\/interest-dividends-other-types-of-income\/alimony-child-support-court-awards-damages\/alimony-child-support-court-awards-damages-1\" target=\"_blank\" rel=\"noreferrer noopener\">Internal Revenue Service (IRS)<\/a> doesn\u2019t consider child support taxable income, I would not consider it in the rent calculation unless you have a HUD-specific home.<\/p>\n<p><a href=\"https:\/\/www.hud.gov\/sites\/documents\/DOC_35649.PDF\" target=\"_blank\" rel=\"noopener\">According to<\/a><a href=\"http:\/\/hud.gov\" target=\"_blank\" rel=\"noreferrer noopener\"> hud.gov<\/a>, \u201c[rental property] owners must count alimony or child support amounts awarded by the court unless the applicant certifies that payments are not being made and that he or she has taken all reasonable legal actions to collect amounts due, including filing with the appropriate courts or agencies responsible for enforcing payment.\u201d<\/p>\n<p>So, does child support count as income for renting? It depends on the situation and, if not required, the risk the landlord is willing to take.<\/p>\n<h3>What income is counted for child support?<\/h3>\n<p>The income counted toward child support can exceed just your salary. In some cases, gross income can include recurring capital gains or unrealized income, winnings from a day of gambling, rental income, and sometimes even interest earned on retirement accounts. Typically, any additional income outside of salary is considered.<\/p>\n<p>Sometimes if C-corporations or S-corporations hold your rental properties, the court may even decide that the retained earnings are subject to child support calculations. If, for some reason, you disagree with the court\u2019s order, perhaps you think an income source shouldn\u2019t have been included, you can elect to go to the court of appeals to review the record. The review is to see if a legal mistake was made and if that mistake affected the overall outcome of the trial court case.<\/p>\n<h3>Is money from rental properties considered income?<\/h3>\n<p>Sure is, but only the net income from a rental property. So, what does that mean? The term \u201crental income\u201d doesn\u2019t necessarily mean you go off the total amount of rent payments coming in. You can <a href=\"https:\/\/www.biggerpockets.com\/blog\/how-to-estimate-rental-property-expenses\" target=\"_blank\" rel=\"noreferrer noopener\">deduct allowable property expenses<\/a> from that amount, which will help you calculate net rental income.<\/p>\n<p>This is because the \u201ccash flow\u201d is the amount received in rent minus what is being paid out, including the interest part of the mortgage payment, property taxes, insurance, and maintenance costs. Not all things you consider an expense are honored by the court.<\/p>\n<p>For example, in a <a href=\"https:\/\/www.graham.law\/wp-content\/uploads\/Geiler2021Unpub.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">Colorado Court of Appeals case<\/a>, \u201cthe trial court found that the principal portion of the mortgage payments did not qualify as ordinary and necessary expenses for purposes of calculating child support.\u201d<\/p>\n<h2>It\u2019s All In The Numbers<\/h2>\n<p>According to the <a href=\"https:\/\/www.census.gov\/content\/dam\/Census\/library\/publications\/2022\/demo\/p70-176.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">Census Bureau<\/a>, \u201cParents who received regular child support payments received a monthly average of $604 and a monthly median of $396 in 2017.\u201d Although there hasn\u2019t been substantial growth in the average year after year, the number does seem to increase continuously.<\/p>\n<p>If you own a rental property and, for whatever reason, are going your separate ways with a spouse, make sure you truly pay attention to all of the numbers, especially your total allowable expenses. Those expenses are crucial in determining your overall rental income and the amount calculated into a child support payment.<\/p>\n<div id=\"hero-block_63371ffa15f2b\" class=\"first:mt-0 hero-block py-4    has-background has-slate-200-background-color has-text-color has-theme-gold-color\">\n<div class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n<div class=\"relative z-30 w-full \">\n<main class=\"py-4\"><\/p>\n<p class=\"has-slate-800-color has-text-color has-large-font-size\" style=\"font-style:normal;font-weight:800\">Join the Community<\/p>\n<p class=\"my-3 md:my-5 lg:my-8 has-slate-900-color has-text-color\" style=\"font-size:16px\">Our massive community of over 2+ million members makes BiggerPockets the largest online community of real estate investors, ever.\u00a0Learn\u00a0about investment strategies,\u00a0analyze\u00a0properties,\u00a0and connect\u00a0with a community that will help you achieve your goals. Join FREE. What are you waiting for?<\/p>\n<p><\/main>\n<\/div>\n<div class=\" first:mt-0 relative h-full lg:flex lg:items-center\">\n<picture decoding=\"async\" class=\"object-cover w-full relative z-20 my-0  shadow-xl rounded-md hidden lg:block sp-no-webp\" title=\"How to Calculate Rental Income For Child Support 2\"><source srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/08\/BiggerPockets-SignUp.webp \" type=\"image\/webp\"><source srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/08\/BiggerPockets-SignUp.png\" type=\"image\/png\"><img src=\"https:\/\/bpimg.twic.pics\/https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/08\/BiggerPockets-SignUp.png?twic=v1\/cover=500:500\/max=1000\/output=preview\" decoding=\"async\" class=\"object-cover w-full relative z-20 my-0  shadow-xl rounded-md hidden lg:block sp-no-webp\" title=\"How to Calculate Rental Income For Child Support 2\" alt=\"BiggerPockets-community\" data-twic-src=\"\/blog\/wp-content\/uploads\/2022\/08\/BiggerPockets-SignUp.png\" data-twic-src-transform=\"cover=500:500\/*\/max=1000\"\/><noscript><img decoding=\"async\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/08\/BiggerPockets-SignUp.png\" alt=\"BiggerPockets-community\"\/><\/noscript><\/source><\/source><\/picture>\n<\/div>\n<\/div>\n<\/div>\n<p class=\"italic\"><b>Note By BiggerPockets:<\/b> These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.<\/p>\n<\/div>\n<p><br \/>\n<br \/><a href=\"https:\/\/www.biggerpockets.com\/blog\/how-to-calculate-rental-income-for-child-support\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In this article So, the day has come to finally figure out how much your rental property income will affect your child support payment. You won\u2019t be surprised that many states consider that pretty penny a critical component when calculating these payments. As with any financial analysis, it\u2019s essential to understand how to break down [&hellip;]<\/p>\n","protected":false},"author":5,"featured_media":7925,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"fifu_image_url":"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/06\/caroline-hernandez-TMpQ5R9mbOc-unsplash-1024x517.jpg","fifu_image_alt":"","footnotes":""},"categories":[9],"tags":[],"class_list":["post-7924","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog"],"_links":{"self":[{"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/posts\/7924","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/comments?post=7924"}],"version-history":[{"count":1,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/posts\/7924\/revisions"}],"predecessor-version":[{"id":7926,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/posts\/7924\/revisions\/7926"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/media\/7925"}],"wp:attachment":[{"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/media?parent=7924"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/categories?post=7924"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/tags?post=7924"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}