Legal Memorandum: Rental Income and Disability Benefits in NY

Issue: In New York, is rental property income considered ‘other relevant income’ such that it reduces the amount of disability benefits payable?

Area of Law: Real Estate Law, Tax Law
Keywords: Rental property income; "Other relevant income"; Disability benefits payable
Jurisdiction: New York
Cited Cases: 735 P.2d 921; 594 N.Y.S.2d 768; 191 A.D.2d 298; 458 S.W.2d 135
Cited Statutes: 20 C.F.R. § 404.1082(a) (2001); 42 U.S.C. § 411(a); 20 C.F.R. § 404.1082(b); 20 C.F.R. § 404.1082(a) (2001); 42 U.S.C. § 411(a); 20 C.F.R. § 404.1082(b); 26 C.F.R. § 1.1402(a)-4(a) (2001); Treas. Reg. 1.1402(a)-4(a); 26 U.S.C. § 1402 (a); 7 C.F.R. § 273.9(b)(1)(ii), § 273.9(b)(2)(ii); N.Y. Soc. Serv. Law § 369-b(2); N.Y. Real Prop. Tax Law § 467-b(1)(c), § 467-c(1)(f)
Date: 02/01/2001

  Extensive research failed to turn up any cases directly on point.  It appears that no New York cases–in fact, no cases throughout the U.S.–have addressed the precise issue of whether rental income may be offset against disability benefits.  In addition, the research revealed no New York cases discussing whether income from rental property is deemed income from employment or self-employment.  Research to locate cases, in New York or elsewhere, that define “other relevant income” and similar phrases also retrieved no results. 

The court in Centennial Life Insurance Co. v. Scherrer, 191 A.D.2d 298, 594 N.Y.S.2d 768 (1st Dep’t 1993), considered the above issue. In Scherrer, the plaintiff insurer appealed the order of the lower court requiring it to pay disability benefits in the full amount under the policy.  As part of its determination, the court considered the claimant’s income from a restaurant business she owned, and whether that income rendered her “engaged in an occupation for remuneration or profit,” disqualifying her from benefits.  Id. at 300, 594 N.Y.S.2d at 770.  The claimant denied earning a salary, and produced a tax return to that effect.  The court noted, however, that the claimant owned the building that housed her restaurant, and that she rented out six other units in the building.  In addition, the restaurant itself had to pay rent to the claimant as the building owner.  The court concluded, based in part on this evidence, that

defendant [claimant] was […]


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