Rental income from real estate is typically excluded from social security earnings. I have been reviewing all of Social Security’s rulings, which go back to the year 1960, In order to gain a better understanding of the historical progression of the program. This is because Social Security Disability comprises a fairly sizable portion of my practice, and I find it helpful to try to understand the historical underpinnings of the program as a whole, as well as the thinking that has shaped the program over time.

In doing this, I came across what I believe is something of a historical oddity. Social Security Ruling (SSR) 61-7 deals with the treatment of farm rental income. This relates to a landlord/tenant relationship in a farm enterprise which produces agricultural or horticultural products. Such an enterprise brings to mind the exploitative system of sharecropping, which was once a fairly common feature in certain parts of the U.S. It is not pleasant to think about the history of economic and other forms of exploitation or inequity in the U.S., but perhaps if we are aware of this history, the hope is that we can learn from it and continue to progress.

At any rate, this particular ruling sets forth the agency’s use of the “material participation” test to determine if farm rental income is countable as social security income. This was a two-pronged test; if both prongs were met, then the farm income to the landlord that was otherwise excluded as rental income, became countable for social security purposes. If the landowner and tenant had an agreement for material participation in the management or production of agricultural crops or livestock, and the landowner did in fact materially participate in such management or production, then the income to the landlord was countable as social security income.

See Social Security Ruling (SSR) 61-7.

This material should not be construed as legal advice for any particular fact situation, but is intended for general informational purposes only. For advice specific to any individual situation, an experienced attorney should be contacted.