May 3, 2021 10:48 pm

Emergency Rental Assistance: Impact on Renters and Landlords

The Consolidated Appropriations Act, 2021, authorized funds to states and other political subdivisions to provide assistance to renters. The funds provide households with help to pay rent, utilities, and home energy expenses.

In FAQs (https://www.irs.gov/newsroom/emergency-rental-assistance-frequently-asked-questions), the IRS made it clear that renters who receive such assistance are not taxed on this financial help. This is so whether payments are made to them and then used for rent, utilities, and home energy expenses, or are made directly to landlords and utilities.

However, landlords that receive payments to cover the rent must include them in their gross income. The same is true for utilities.

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Tax Glossary

Installment sale

A sale of property that allows for tax deferment if at least one payment is received after the end of the tax year in which the sale occurs. The installment method does not apply to year-end sales of publicly traded securities. Dealers may not use the installment method. Investors with very large installment balances could face a special tax.

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