I am a landlord and I received rental assistance payments from the State of Illinois due to Covid. Do I have to claim this payment as rental income on my taxes?

[PattiF]

From the Illinois Legal Aid site:  This is not a loan. It is not income. You do not have to report it on your taxes.

[SeanTT2021]

This amount does not appear to be includable as taxable income for federal or state purposes. Qualified disaster relief payments include payments from state authorities for qualified disasters according to IRC section 139(b)(4). Qualified disasters include disasters for which state governments determine that relief payments are warranted. I.R.C. section 139(c)(4).

Furthermore, qualified disaster mitigation payments are not taxable under IRC section 139(g)(1). Qualified disaster mitigation payments are payments for the “benefit of the owner of any property for hazard mitigation with respect to such property” that does not pertain to the sale or disposition of that property. I.R.C. section 139(g)(2).

Here, payments to landlords from IL could be construed as either a qualified disaster relief payment or qualified disaster mitigation payment. Guidance from state authorities could shed light on this question as to whether the state payment was made in response to a disaster warranting relief. As such, the IL payments to landlords does not seem to be a includable as taxable income for federal or state purposes, since the IL Housing Authority classifies the payments to landlords as "2020 Emergency Rental Assistance Program."

https://www.ihda.org/about-ihda/covid-19-housing-resources-information/ 

[Carl]

I am a landlord and I received rental assistance payments from the State of Illinois due to Covid

I'm just providing clarification here for others that may read this thread.

Typically, all monies received for rental property from any source for any reason is included in the total rental income received for the tax year on the *federal* tax return.  The only exclusions for that which I am aware of, are payments specifically excluded by the *federal* government (not state) such as payments for a federally declared disaster.

[jivefive99]

Hi, I'd love to believe that the Illinois payment, which I recently got ($9k) as a landlord, is neither a loan or income.  However, the Illinois Rental Payment Program FAQ site says these payments will be reported as "ordinary income," which is the WORST of the incomes.  You sure about the money not being taxable?  I would be ok if it was reported to the IRS as RENTAL income, but this is starting to look like something which will wipe out my usual $5k refund if it is reported as ordinary income.  Help!

[jivefive99]

From the 2021 site ...

7. Will housing providers pay taxes on Illinois Rental Payment Program funds if their tenant’s
application is approved?
• Yes, ILRPP assistance will be considered gross income for tax purposes for the housing provider.
Tenants are not required to pay taxes on ILRPP assistance as it is not considered income for
members of the household.

[SeanTT20211]

The FAQ section you’re referring to pertains to 2021 payments. My previous posting (posted as SeanTT2021) only pertains to payments made during 2020. Review FAQ section for 2020 payments, here:

https://www.ihda.org/about-ihda/covid-19-housing-resources-information/#collapse2020LandlordFAQs

It appears the IL agency issuing these payments during 2021 is taking the stance that they do not meet the qualifications under IRC section 139. As such, they would be taxable absent any other exclusion.

[veronica708]

Are we to include the IL rental payment program payment received in our 2021 tax returns?

[jivefive99]

While I havent received any tax paperwork for the 2021 state program as of yet (in Feb of 2022), and I may receive none, the FAQ on their website (below) has changed recently to say the money from the program sent to the landlords should be considered "rental income"

https://www.illinoishousinghelp.org/faqs#landlords-ID

Scott

[LeonardS]

Yes, you will report the rental assistance from the state of Illinois as rental income.  You will report the amount you received even if you do not receive any paperwork from the state.

[lvivar]

As a landlord, I received the 1099 MISC for my tenant's rental assistance payment in 2021. The amount I received is in box 3 (other) not box 1 (rent). So when completing my return do I enter it in the income section, or when I get to the "rentals" section an list as rent collected? Problem is, also, that if I try to enter it a rent in the "rental" section, because it's in box 3, not 1, turbo tax is not taking it. Does it matter? Does it get taxed differently?

Please help, thanks!

[jivefive99]

Repeat:  While I havent received any tax paperwork for the 2021 IL state program as of yet (in Feb of 2022), and I may receive none, the FAQ on their website (below) has changed recently to say the money from the program sent to the landlords should be considered "rental income."  You'll get killed in taxes if you enter it as ordinary income.

https://www.illinoishousinghelp.org/faqs#landlords-ID

[KrisD15]

It could make a difference for several reasons. 

If you don't have enough rent income to cover the rental expenses, you may have unusable passive loss. 

If your rental qualifies for the QBI deduction, the income won't be included in that calculation if entered as "ordinary income".