How Much Rent Must You Pay to Qualify for a Tax Deduction?

by Lynn Burbeck, studioD

Each year, homeowners throughout the United States have a number of beneficial tax deductions they can take advantage of to help offset expenses, such as those spent on property taxes and mortgage interest. But while renters often have significant expenses associated with their homes or apartments, they don't have access to the federal tax deductions that are so common to homeowners. These deductions are commonly available on the state level, however. If you rent your home, you should check your state's tax laws to see what deductions may be available to you.

General Eligibility

Although eligibility requirements vary between states, there are a few general eligibility rules that you must meet to quality for a rent deduction. First, the house or apartment must be your principal residence. Secondly, you must pay rent on the property. In other words, if you're a college student and your parents pay your rent, you won't be eligible for a deduction. Likewise, your parents won't be eligible for a deduction, because the apartment isn't their principal residence.

Deduction Limits

Typically, the deduction limit is set at 50 percent of the rent paid throughout the given tax year. There is a cap on this amount, however. In both Massachusetts and Indiana, for example, the maximum amount of money you can deduct is $3,000 per year.

Income Limits

Some states require taxpayers to meet certain income and rental-payment guidelines before they're eligible to claim a deduction on their rent payments. In Minnesota, for example, taxpayers without dependents must have a household income less than $53,540. For households with dependents, that amount goes up to $75,440 depending on the number of dependents in the home. In Vermont, the income limit for a household is $47,000.

Rent Limits

In Maryland, for example, taxpayers must meet a minimum rent-to-income ratio to be eligible for a deduction. Taxpayers who are over the age of 60 or 100 percent disabled who gross $25,000 a year must pay rent in excess of $794 per month to qualify for a deduction. Taxpayers under the age of 69 must live in at least a two-person household, have one dependent under the age of 18 years old, not receive federal or state housing subsidies and meet the gross household income limits. Income limits vary depending on the number of people living in the household.

About the Author

Lynn Burbeck is a professional writer with over five years of experience writing for the Web. She has published numerous articles for print and online media including "Grit" Magazine. Burbeck holds a B.A. in journalism and political science.

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