What Are the Tax Benefits of Renting as a Senior?

While homeownership often comes with significant tax advantages, seniors who rent their homes can still access certain tax benefits and financial relief. Understanding these advantages can help retirees maximize their savings and better manage their finances.

1. State-Level Renters’ Tax Credits

Many states offer tax credits or rebates specifically for renters, including seniors. These programs vary widely by location but typically provide relief based on income, age, and the portion of rent attributed to property taxes.

• California: The California Renter’s Credit offers modest rebates to seniors who meet specific income thresholds.
• Wisconsin: The Homestead Credit supports low-income seniors and renters.
• Missouri: Seniors renting properties may qualify for the Property Tax Credit Claim, even if they don't own a home.
  Check your state’s Department of Revenue website for eligibility criteria.

2. Medical Expense Deductions

For seniors who live in rental housing, certain medical-related expenses might be tax-deductible, especially if living in an assisted living facility.

• Rental Payments Linked to Care: If part of your rent covers medical care or services (like in a continuing care retirement community), that portion may qualify as a deductible medical expense.
• Threshold: These deductions apply if your total medical expenses exceed 7.5% of your adjusted gross income.

3. Moving Expenses for Job Relocation (Limited Cases)

Although the IRS largely eliminated moving expense deductions in 2018, retirees returning to the workforce or relocating for part-time jobs may still qualify under specific conditions.

• Example: A senior moving from Orlando, Florida, to Chicago, Illinois, for work could potentially deduct qualifying moving costs, provided they meet the IRS requirements.

4. Renting for Business Use

Seniors who run a business or work remotely from their rental home may qualify for a home office deduction.

• Eligibility: You must use part of your rental exclusively for business purposes.
• Deductible Costs: A proportionate share of your rent, utilities, and insurance could be deducted, reducing your taxable income.

5. Social Security and Rental Assistance Impact

While not a direct tax benefit, seniors relying on Social Security income may benefit from rental assistance programs. These programs, such as those offered by HUD, can help seniors reduce their overall housing costs, effectively creating indirect tax savings by preserving more income for other needs.

6. State and Local Exemptions

Some municipalities provide rent-related tax exemptions for seniors, especially those in income-restricted housing. For example:

• New York City: The Senior Citizen Rent Increase Exemption (SCRIE) program prevents rent hikes for eligible low-income seniors.

Key Considerations for Seniors

• Track Expenses: Keep detailed records of all potential tax-deductible costs, including healthcare-related rent payments or expenses tied to a home office.
• Consult a Tax Professional: Tax laws change frequently, and a professional can help you navigate both federal and state benefits.
• Research Local Programs: Many benefits depend on your specific location, so explore county-level initiatives that might apply.

By leveraging these tax advantages, seniors who rent can better manage their finances and stretch their retirement income further.