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Deducting your rent expense in Massachusetts

Posted by Andrew Chan  March 11, 2010 10:00 AM

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My son is a graduate student in Boston for 2009 and has W-2 wages. He's lived there all year. I understand that he's considered a resident for tax purposes. He is no longer a dependent of anyone else. Does he also get to take advantage of the Rental Deduction?

Based on the information in your question, your son should be able to take a deduction for the rent he has paid for his principal residence as long as his rent was not paid by a third party (such as a parent or other relative) and his principal residence is in Massachusetts.

The deduction is for 50 percent of the rent he paid, up to $3,000. Keep in mind that this deduction is based on the actual amount rent paid by the taxpayer. Therefore, if he had a roommate and they shared the rent expense, each taxpayer would be able to deduct the amount that they each paid.

For purposes of this deduction, the Massachusetts Department of Revenue (MA DOR) does not consider the following as a Principal residence:
  • an apartment or house of a student or faculty member who has a principal residence elsewhere;
  • apartment or house of a nonresident who has a legal residence in another state or country;
  • apartment for a person on a temporary assignment in Massachusetts;
  • dorm room;
  • a hotel, motel, or rooming house occupancy where no rental agreement exists;
  • a nursing home or a retirement home for the elderly where no rental agreement exists;
  • a vacation home.
In addition, deductible rent payments are defined as amounts paid specifically as rent. You may include amounts paid for utilities, furnishing and parking if the landlord includes them as part of your rent payment and does not make a separate charge for these items. Rent payments do not include condominium fees, separately stated amounts paid for utilities, furnishing, parking. Advance payments such as security deposits, last month's rent, etc. are not considered rent payment until they are actually applied towards your rent.

For more information visit the MA DOR web site at http://www.mass.gov/?pageID=dorconstituent&L=2&L0=Home&L1=Individuals+and+Families&sid=Ador

This blog is not written or edited by Boston.com or the Boston Globe.
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Local finance professionals share insights and advice on issues such as budgeting, managing debt, and retirement planning.

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D. Abraham Ringer is a CERTIFIED FINANCIAL PLANNER practitioner and a Financial Adviser with Morgan Stanley Global Wealth Management in Boston. He is registered in MA, NH, NY and several other states to which his articles are directed. For more information please visit www.morganstanleyfa.com/ringer
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