Does Rental Income Count Against Social Security?

Many individuals who are retired or planning for it and own rental properties question how this income might interact with their Social Security benefits. The concern is whether money earned from tenants could lower the monthly payments they receive from the Social Security Administration (SSA). Understanding the specific rules the SSA applies is a necessary step in managing retirement finances.

The Social Security Earnings Test Explained

The Social Security Administration uses the retirement earnings test to determine if your benefits should be reduced. This test is only relevant for individuals who choose to receive retirement benefits before they reach their Full Retirement Age (FRA). Once you attain your FRA, the earnings test no longer applies, and you can earn any amount of money without your benefits being affected. The feature of this test is that it exclusively considers earned income, which includes wages from a job or net earnings from self-employment.

For those under their FRA for the entire year, the 2025 annual earnings limit is $23,400. If your earnings exceed this, the SSA withholds $1 in benefits for every $2 earned above the threshold. A higher limit of $62,160 applies in the year you reach your FRA. In that year, the reduction is $1 for every $3 earned over the limit, counting only income from the months before reaching FRA.

How Rental Income is Typically Treated

For most individuals, the Social Security Administration classifies income from real estate rentals as passive, or unearned, income. This is because it is viewed as a return on investment in the property, not as payment for services performed. As a result, this rental income does not count toward the annual earnings test limit.

This means that for most landlords, the rental income they collect will not cause a reduction in their Social Security retirement benefits. For example, an individual who rents out a single-family home may have duties that include advertising the property, screening tenants, collecting rent, and arranging for major repairs. These activities are considered normal incidents of property ownership.

The SSA views these tasks as actions taken to protect the investment, not as a trade or business generating earned income. Therefore, the net profit from the rent is classified as passive.

Exceptions That Reclassify Rental Income

The default treatment of rental income as passive is not absolute, as certain situations can cause the SSA to reclassify it as earned income. When this happens, the income becomes subject to the annual earnings test, potentially reducing benefits for those under Full Retirement Age. One exception involves providing substantial services to the occupants of the property that are not required to maintain it for occupancy.

Examples of substantial services include regular cleaning, maid service, or serving meals. These go far beyond standard landlord duties, such as cleaning common areas or handling necessary repairs. If a landlord provides these more intensive services, the SSA may determine they are operating a business, and the net rental income would be considered earned.

Another exception applies to individuals considered real estate professionals. If your rental activities are extensive enough to be your primary trade or business, the net income is treated as earned. The SSA looks at whether you “materially participate” in your rental activities, which is a fact-based determination considering the time and effort you dedicate to managing your properties. Someone who spends hundreds of hours a year actively managing a portfolio of properties as their main occupation would likely have this income classified as earned.

Distinctions for SSI and SSDI Recipients

The rules for rental income differ for other programs administered by the SSA, such as Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI). Unlike the retirement program, SSI is a needs-based program with strict income and resource limits. SSI considers both earned and unearned income when determining eligibility and payment amounts.

For SSI recipients, rental income, even if classified as passive, will be counted and will reduce their monthly SSI payment. The program has complex rules, but any countable unearned income, including net rent, reduces the SSI benefit on a dollar-for-dollar basis after a small initial exclusion. This makes it difficult for an SSI recipient to benefit from rental property ownership without affecting their eligibility.

For those receiving SSDI, the concept is not the earnings test but “Substantial Gainful Activity” (SGA). The SSA uses the SGA earnings threshold to determine if a person is earning too much to be considered disabled. If the work involved in managing rental properties is significant and the net income exceeds the monthly SGA amount, it could trigger a review of their disability status. However, passive rental income generated with minimal effort is not considered SGA and would not impact SSDI eligibility.