How much should I charge my child for rent in an SSI loan agreement?

When you are drafting a loan agreement for your child during the SSI application process, you will need to determine how much to charge your child monthly for rent and their share of food and household expenses.

Rent is supposed to be the fair market value, so take the number of people who live in your home, divide it by your mortgage or rent payment, and that's the amount of your child's share. Depending on the cost of living in your area, your child's fair share might actually be more than their expected SSI payment. In California, where the SSI monthly benefits are about $1,300, most people settle somewhere around $700-$800 to charge their child for monthly rent.

As a parent, if you have a sinking feeling such as "I have to charge my 18 year old rent? I would never do that," then remember that SSI will consider free housing as in-kind income, which will reduce your child's monthly benefits. What you do is create a rental agreement with your child on their 18th birthday that they have to pay you this rent. Also, create a rental loan agreement that basically says when they get income, they will pay you back for all these months. You're loaning them the rent for the months until they get income. (Important: Do not make the rental loan agreement dependent on getting SSI.)

Your child's monthly SSI benefits will be deposited in a bank account with their name on it. You can be on the account too because you're going to be what's called a representative payee. The money goes in from SSI each month, and then you take $700 or other rent amount out of their account and do a transfer to your bank account that the child is not on. That way, if there's an audit, which there could be at some point, you have a clear trail the child paid rent to your bank account.

Non-Attorney Education Advocate Lisa Carey says, "Once it's in your bank account, it's your money. You can do whatever you want with it. So if you choose to gift money to your child by putting it in their CalABLE account, that's your business, right? So if you're not feeling good about charging rent, that's how you do it."

For more information, see our article about SSI for individuals age 18 and up.