Creating a Rental Loan Agreement Under SSI Regulations

Supplemental Security Income (SSI) is a federal benefit available to people who are unable to work due to disability and meet specific income and asset guidelines. For purposes of SSI eligibility, money that someone gives you to help pay for food or rent is counted as income. This is known as in-kind support and maintenance, or ISM.

If the ISM is a gift, it may be considered income and would make you ineligible for SSI or may reduce the amount of your benefits. If it is considered a loan, it will not jeopardize your application for SSI.

If you are applying for or receiving SSI, you may need to create a rental loan agreement for this purpose.

What Is a Rental Loan Agreement and How Does It Differ from a Rental Agreement?

A rental loan agreement is a type of rental agreement that you make with the person you are staying with to pay back rent.

The Social Security Administration has a policy that will allow you to set up a rental loan agreement to owe rent and pay it back in the future. You could make a rental agreement directly with the landlord or through a sublet.

SSI Rental Loan Eligibility, Requirements, and Regulations in Kentucky

Your living arrangements can affect your SSI eligibility and the amount of your benefits.

Whether you live in your own house or apartment, someone else’s home, or a group care home, hospital, or nursing home could cause your benefit amount to vary.

Your benefits are subject to the One-Third Reduction Provision if you live in someone else’s house and do not pay for food and shelter. This means that the standard SSI benefit of $771 would be reduced to $514.

Common Rental Loan Agreement Examples for People Receiving SSI

Some examples of rental situations may include:

• You live in a house owned by your parents. Before you apply for SSI, you sign a rental agreement to rent a room in their home. At the SSI interview, you present the rental loan agreement and receive full SSI benefits for all backpay months. You then reimburse your parents for the rent you owe them.
• Your friend John is renting an apartment. He agrees to let you live there as long as you promise to pay him back your half of the rent and utilities. You and John sign a rental loan agreement. After you are approved for benefits, you pay John back.
• You move in with your son and grandchildren and receive food and shelter from their household. You do not help pay for household expenses. Your monthly SSI benefits would be reduced by one-third.
• Continuing from the example above, you notify Social Security that you have started paying your son for your share of the household expenses for food and shelter. Including you, there are four members of the household, and the cost of utilities, rent, and food is $1,600. You pay your son $400, which is your share of the expenses. Your SSI would no longer be reduced by one-third. You would receive the full amount.
• You move into your own apartment and pay your own shelter and food expenses. The one-third reduction rule does not apply, and you would receive the full amount of your SSI benefit.

How to Make a Rental Loan Agreement in Kentucky

The rental loan agreement should be obtained in writing and signed and dated by both parties. Two possible consequences if it is not are that your back pay could be reduced if it is determined that the rent is a gift, or the Social Security Administration may think that you are giving money away when you try to repay the loan.

If you are paying back a loan, you always want to be able to show documentation.

To make a rental loan agreement in Kentucky, both parties should sign a statement confirming the details of the rental: the amount of rent owed for each month, the amount charged for utilities, interest owed, and any other information.

Important things to consider:

• Ensure the loan agreement is enforceable as an oral or written agreement under Kentucky law. An attorney licensed in Kentucky can be helpful in this process.
• Make sure that the loan agreement is in effect at the time the ISM is provided. The obligation for repayment must be established for the ISM to be considered a loan, and to keep it from reducing SSI benefits.
• Both the lender and the borrower must acknowledge the repayment obligation, and the loan must be unconditional. In other words, all conditions of the loan need to have been met, and the lender needs to have formally approved of the loan.
• The loan agreement needs to include a plan or schedule for repayment. This repayment plan must be feasible. Only the amount of the loan, the individual’s income, and the individual’s living expenses should be considered as part of the repayment. Services, such as lawn mowing or housekeeping, should not be regarded as part of the repayment plan’s feasibility.

Contact Paul Baker Law Office for Help with Your Rental Loan Agreement

The attorneys at Paul Baker Law Office can help you with your rental loan agreement in Kentucky. Every situation is unique, and at Paul Baker Law Office, we understand that your SSI benefits are very important to you.

Our team is knowledgeable about disability requirements and the details of rental agreements in Kentucky. We will listen to your concerns and answer all your questions related to your rental loan agreement and your SSI benefits.

Please call Paul Baker Law Office today or visit us at our website for a free consultation.

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