Code of Massachusetts Regulations › 830 CMR - DEPARTMENT OF REVENUE › Title 830 CMR 62.00 - Income tax › Section 62.3.1 - Rent Deduction

Current through Register 1525, July 5, 2024
(1)
General
. An individual who rents property located in
			 the Commonwealth as his or her principal residence is entitled to an income tax
			 deduction from Part B adjusted gross income equal to 50% of the rent, as
			 defined in
			 830
			 CMR 62.3.1, paid to the landlord. For taxable
			 years beginning on or after January 1, 2001, the maximum deduction shall not
			 exceed $3,000. (M.G.L. c. 62, § 3(B)(a)(9)).
(2)
Location of Principal
			 Residence
. A taxpayer must be a resident of Massachusetts for his
			 or her principal residence to be in Massachusetts. If a taxpayer is resident in
			 Massachusetts and has only one place of residence, that place of residence is
			 the taxpayer's principal residence. If a taxpayer is resident in Massachusetts
			 and has more than one place of residence, the determination of which place of
			 residence is the taxpayer's principal residence depends upon all the facts and
			 circumstances in the case, including the number of days spent at each place of
			 residence and the good faith representations of the taxpayer.
Example 1:
A, a Massachusetts
				resident, owns a house in Springfield in which he or she lives most of the year
				and also rents a cottage on Cape Cod which he or she uses in the summer months.
				The Springfield house is his or her principal residence; the summer cottage is
				not. A may not deduct the rent on the summer cottage.
Example 2:
B, a New Hampshire
				resident, owns a house in New Hampshire and also rents an apartment in Boston.
				His or her New Hampshire house is his or her principal residence; the Boston
				apartment is not. B may not deduct the rent on the Boston apartment.
Example 3:
C, a Massachusetts
				resident, rents an apartment in Boston in which he or she lives most of the
				time and also rents a cottage in Maine. The Boston apartment is C's principal
				residence; the Maine cottage is not. C may deduct the rent on the Boston
				apartment.
Example 4:
D, a University of
				Massachusetts undergraduate student, rents an apartment in Amherst during the
				school year and resides with his or her parents in the family home in Newton
				when he or she is not at college. His or her home in Newton is his or her
				principal residence; the apartment rent is not deductible.
(3)
What Constitutes
			 Rent
. For purposes of
			 830
			 CMR 62.3.1"rent" means the amount paid to a
			 landlord by a tenant for the rental or lease of premises which are occupied as
			 a principal residence located in Massachusetts.
Rent may include the rental of a mobile home or of a mobile
				home site. Payments by a tenant-stockholder of a cooperative housing
				corporation to the corporation and payments by an owner of a condominium unit
				to the condominium association are not rent. Consideration paid for the
				occupancy of a "hotel", "lodging house" or "motel", as defined in M.G.L. c.
				64G, § 1, or similar occupancies, is not rent, unless and until such
				premises are occupied under a rental agreement, written or oral, creating a
				landlord-tenant relationship.
In determining the amount of the deduction, rent includes the
				amount paid for heat, hot water, gas, electricity, furniture or parking, if the
				landlord makes no separate charge for these items. But if charges for these
				items are separately stated at the time of rental, in the rental agreement or
				otherwise, such charges do not constitute rent for purposes of the rental
				deduction.
Example:
Under the terms of E's lease
				the rental price of his unit is $300 per month, which includes the cost of heat
				and hot water. The lease provides for an additional charge of $25 per month for
				a parking space. E pays for his own electricity. E's rental deduction for each
				month of occupancy for which rent is paid is $150 (50% of $300 rent).
Where a tenant provides services to a landlord and in
				consideration for such services receives a reduction in rent, rent is the
				actual amount of money paid by the tenant to the landlord; rent does not
				include payments in kind.
Example:
M, a tenant in N's apartment
				building, tends the garden surrounding the building. In consideration for this
				service M is charged only $250 per month for the right to occupy his apartment
				unit; other tenants, occupying similar units, are charged $300 per month. M's
				rental deduction for each month of occupancy for which rent is paid is $125
				(50% of $250).
Rent does not include amounts paid as a security deposit or
				amounts paid for the last month's rent upon entering into a lease, unless and
				until applied to unpaid rent.
(4)
Persons Entitled to
			 Deduction
. A taxpayer whose principal residence is in
			 Massachusetts and who pays rent for such premises is eligible for the rental
			 deduction. If two or more individuals jointly rent a unit, each individual who
			 occupies the unit as his principal residence is entitled to a deduction based
			 on the amount of rent he paid.
Example 1:
F, a young artist, occupies
				as her principal residence an apartment in Cambridge, which is leased for her
				by her aunt who resides in Boston. The rent is paid by the aunt. F is not
				entitled to a deduction since she does not pay the rent; the aunt is not
				entitled to the deduction because the apartment is not her residence.
Example 2:
G, a teacher, and H, a
				salesman, rent an apartment in Boston for $300 a month; each pays $150. The
				apartment is G's only residence; H also owns a house in Pittsfield in which he
				lives when not traveling. G's rental deduction for each month of occupancy for
				which rent is paid is $75 (50% of $150). H is not entitled to a deduction since
				the Boston apartment is not his principal residence.
(5)
Prepayment and Late Payment
			 of Rent
. The rental deduction may only be taken for the taxable
			 year in which the rent was paid (but see
			 830
			 CMR 62.3.1(3)  for special
			 rules as to amounts paid for the last month's rent or as a security deposit);
			 it applies to rent paid after December 31, 1980 for rental periods ending after
			 that date.
Example 1:
I, a tenant whose rental
				period runs from the first to the last day of the month, pays his January, 1982
				rent in December, 1981. I will take the deduction for the January, 1982 rental
				period on his 1981 return, the return for the year in which the payment was
				made.
Example 2:
J pays his October and
				November, 1981 rent in February, 1982; he may take the deduction for this
				payment on his 1982 return, the return for the year in which the payment was
				made.
Example 3:
K, a tenant whose rental
				period runs from the 15th day of one month to the 14th day of the following
				month paid rent for the December 15, 1980 to January 14, 1981 rental period on
				December 15, 1980. K is not entitled to a deduction for this payment since the
				rental deduction applies to rent paid after December 31, 1980.
(6)
Recordkeeping
.
			 Every taxpayer claiming the rental deduction must provide the information
			 required by the appropriate schedule of the Massachusetts Income Tax Return
			 (Form 1) and must retain adequate records to substantiate the
			 deduction.
(7)
Effective Date
. The residential rental deduction is
			 effective for taxable years ending after December 31,
			 1980.