The Hidden Risks of Extra Income: Rental Properties, Real Estate Work, Self-Employment, and Social Security Disability Eligibility

Welcome to Season 2, Episode 1 of Winning Isn't Easy: Navigating Your Social Security Disability Claim. In this episode, we'll dive into the complicated topic of The Hidden Risks of Extra Income: Rental Properties, Real Estate Work, Self-Employment, and Social Security Disability Eligibility.

Many people receiving Social Security Disability benefits are surprised to learn that owning property, collecting rent, or earning side income can put their benefits at risk. While most know that full-time work can jeopardize eligibility, fewer realize that rental payments, online sales, or small business profits may also raise red flags with the Social Security Administration. In this episode of Winning Isn’t Easy, we explain how the SSA evaluates income that looks “passive” but may still count as work. We break down the difference between earned and unearned income, what qualifies as substantial gainful activity, and why activities like managing rental property or running an online business can trigger problems. We also compare SSDI and SSI, showing how the same income or property can have very different consequences depending on which program you receive. By the end of the episode, you’ll better understand where the lines are drawn and how to protect the benefits you’ve earned.

In this episode, we'll cover the following topics:

One - Understanding SSDI, SSI, and How Rental Income Fits In

Two - Real Estate Agents Who Own Rental Property

Three - Administrative Law Judge Awards Benefits at Hearing After Ruling That Self-Employment Income Selling Wellness Products Online Did Not Constitute Substantial Gainful Activity

Whether you're a claimant, or simply seeking valuable insights into the disability claims landscape, this episode provides essential guidance to help you succeed in your journey. Don't miss it.


Listen to Our Sister Podcast:

We have a sister podcast - Winning Isn't Easy: Long-Term Disability ERISA Claims. Give it a listen: https://wiedisabilitypodcast.buzzsprout.com


Resources Mentioned In This Episode:

LINK TO YOUR RIGHTS TO SOCIAL SECURITY DISABILITY: https://mailchi.mp/caveylaw/your-rights-to-social-security-disability-benefits

FREE CONSULT LINK: https://caveylaw.com/contact-us/


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Need help with your Social Security Disability claim? Have questions? Please feel welcome to reach out to use for a FREE consultation. Just mention you listened to our podcast.

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Please remember that the content shared is for informational purposes only, and should not replace personalized legal advice or guidance from qualified professionals.

Transcript

Nancy Cavey [00:00:00]:
 Foreign. Welcome back to Winning Isn't Easy Social Security Disability Benefits, the podcast where we break down everything you need to know about navigating the Social Security system. I'm your host, Nancy Kvy. Before we get started, I've got to give you a legal disclaimer. This podcast isn't legal advice. The Florida Bar association says I have to say this, and now that I've said it, I want to assure you that nothing will prevent me from giving you an easy to understand overview of the Social Security disability claims process, the games that are played, and what you need to know to get the disability benefits you deserve. So off we go. Now.
 
 Nancy Cavey [00:00:53]:
 Today I want to take a closer look at something that confuses and sometimes surprises a lot of people who are receiving or applying for Social Security Disability benefits. How owning property, collecting rent, or earning income from side work can impact your eligibility for your Social Security Disability benefits. Now, most people know that working full time will jeopardize their Social Security Disability benefits. But what many don't know is that certain kinds of income, even money while you're not actively working for it, like rental payments, online sales, and even small business profits, can raise red flags with the Social Security Administration. Now, maybe you've invested in real estate property to make ends meet. Maybe you manage a few units on the side or handle your own listings as a licensed real estate agent. Or maybe you started an online business selling crafts or wellness products or offering freelance services from home. It sounds manageable, and some of it might actually be passive.
 
 Nancy Cavey [00:01:55]:
 But under the Social Security rules, the difference between earned income and unearned income and what counts as substantial gainful activity can make or break your case, particularly at the initial application stage. Now it can get complicated. Let me explain what I mean. While both Social Security Disability SSDI and Supplemental Security Income SSI provide support for people who can't work because of disability, they operate under completely different standards. SSDI focuses on your ability or inability to work, while SSI is going to focus on your financial need. And that can mean that property ownership, rental payments, or small self employment ventures can have very different consequences depending on what program you're in. So in this episode I want to break down how the Social Security Administration looks at these situations. So I'm going to start out with talking about whether owning property or collecting rent can affect Social Security Disability eligibility and SSI eligibility, including what happens when you handle maintenance yourself or you treat property as part of your business.
 
 Nancy Cavey [00:03:05]:
 Then I'm going to look at what it means for real estate agents who collect rent or manage investment properties while on disability and how those activities can cross into earned income. And last, I'm going to take a look at other kinds of self employment like online sales, small home based businesses or so called passive income and how Social Security will determine whether that work is truly passive or actually qualifies as substantial gainful activity. And I'm going to walk through a real world case where a woman selling wellness products online fought about that very issue and in this instance one. So by the end I hope you have a clear understanding of where the lines are drawn, what income is safe, what might raise questions, and how to protect the benefits you've worked hard to earn. So let's get started. Three things 1 understanding Social Security Disability SSI and how rental income falls in the game 2 real estate agents who own rental property and what that can mean for their benefits and number three, how an administrative law judge awarded benefits at a hearing after ruling that the self employment income selling wellness products online did not constitute substantial gainful activity. But before we get started, let's take a break.
 
 Narrator of Disability Insurance Advertisements [00:04:22]:
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 Nancy Cavey [00:04:47]:
 Welcome back to Winning Isn't Easy. Let's talk about understanding Social Security Disability SSI and how rental income falls into this equation. Now, the Social Security Administration operates two different kinds of disability programs and you really need to understand the difference before we even start talking about rental income or real estate. The programs may sound familiar or similar, if you will, but they're really built and grounded on different eligibility foundations. SSD Social Security Disability is available for individuals who have worked sufficient work credits. Individual and the number of work credits you need will vary based on your age, but typically you have to work 20 out of the last 40 quarters and paid into the system through payroll taxes to become insured for Social Security Disability purposes. Now, as a general rule, your insured status can end about five years after you stop work and stop your contributions. So keep that in mind.
 
 Nancy Cavey [00:05:48]:
 The next type of benefit is Supplemental Security Income ssi. That's a program for those people who don't have enough work history credits or they have a situation where their quarters of coverage have expired. So remember I told you that you're that after you work for generally 20 out of the last 40 quarters, you become insured and that you can lose Your insured status. Well, that's the other option here for folks is SSI if their quarters of coverage have expired. But, and this is a big but, to qualify for SSI you have to meet both an asset test and an income test. And that means that Social Security is going to look carefully at what you own and what money comes in each month. Having too much in the way of assets or income, even just a wafer thin level over that limit, can completely disqualify you for ssi. And SSI is truly needs based, so every dollar counts.
 
 Nancy Cavey [00:06:52]:
 So we're going to be talking about rental income. Rental income can impact eligibility for both SSDI and ssi, but again, the impact is going to be very different under each income. So let's talk about SSDI first and owning property and collecting rent. Now, a disabled individual receiving SSDI can legally own personal rental property and even earn money from those rental payments. Now the important distinction here is that SSDI does not have an asset limit. So ownership of property investments or unearned passive or rental income generally does not impact the eligibility for ssdi. But that's not entirely without consequences. The rental income, along with any other investment income you receive, could make your Social Security disability benefits taxable.
 
 Nancy Cavey [00:07:49]:
 While this doesn't impact your qualification for SSDI itself, it could create a tax liability. So that's an issue that you should be discussing with your tax advisor. There is one notable exception to the rule. If you're receiving rental income you earn as part of your trade or business as a real estate agent. And that income may very well be classified as earned income rather than passive income. Earned income can disqualify you from receiving Social Security disability benefits. In other words, when you apply for benefits you have to have, you have to keep your earnings, if you will, under what's called SGA, significant gainful activity. And for 2025, that number is 1620.
 
 Nancy Cavey [00:08:35]:
 So if you earn more than 1620, you may not be eligible for Social Security because your earnings are over sga. So I deal with real estate agents who are wanting to apply for Social Security benefits and I ask them, you know, have you stopped working with the status of your commissions? When do you think you're going to get your last commission? How much is it going to be? Because that will impact the timing of you applying for your Social Security benefits. Now, of course, if you are collecting Social Security disability benefits, that earned income that you receive as part of the rental income that you are receiving, because that's the nature of your former work, may be classified as earned income and potentially, as I said, impact your continued eligibility for Social Security. Now, let's say you're not a real estate agent and and you own rental properties should be. Should you be doing your own maintenance or physical labor in your rental property? Heck, no. Why? Because the Social Security Administration may interpret that activity as showing an ability to work. So while you may not be able to quote, unquote, do your past work as a real estate agent, you can clearly do other work because you're demonstrating that by doing maintenance work and your claim, therefore, you can be denied at step five. Got that? Now let's talk about owning property and an SSI claim.
 
 Nancy Cavey [00:10:05]:
 The situation is completely different. In fact, it's much stricter. Since SSI is based on your financial need, both your income and your assets are going to be considered. And generally, you can't own rental property or receive rental income because both are counted as resources that generally exceed the allowable limit. So in most cases, this is going to disqualify you from receiving ssi. So to sum up, in the Social Security disability scenario, you have to be careful about the timing of your application for Social Security benefits. If you're earning commissions or have a rental income as a result of of being a real estate agent, because you may not qualify, the income may be higher than the sga. If you are not a real estate agent, you have more flexibility in owning the property and collecting rent because that's more passive in nature.
 
 Nancy Cavey [00:11:04]:
 However, if you're doing maintenance work, that can show to Social Security Administration that you have the capacity to work, which could result in a step five denial. So the distinction between earned and unearned income and the purpose of that income makes all the difference. Got it. Let's take a break. Foreign. Welcome back to Winning Isn't Easy. Let's talk about real estate agents who own rental property and their entitlement to SSD or ssi. Okay, I get this question all the time from real estate agents, so let's answer it.
 
 Nancy Cavey [00:12:18]:
 I'm a real estate agent who owns rental property. Will any of the rent I collect from this property disqualify me from getting Social Security disability benefits? Again, the answer is going to depend on how Social Security categorizes your income and your level of work activity. So ssdi, as I've talked about, is a program where you have worked enough quarters of coverage to become insured and you don't have monthly gross income over SGA. Now, SGA threshold changes every year. This year, 2025, it's 1620 and if your average monthly earnings exceed that SGA amount, you're considered to be able to engage in gainful employment and you will be disqualified from receiving Social Security no matter how disabled you are. When you apply for your Social Security disability benefits, the local office at DDS is going to be looking at your income and you're obviously going to be disclosing your income. And if they see that you are earning more than the 1620 for 2025, you are going to get a technical denial on the basis that you're earning more than sga. In my view, there's no point in fighting that because the numbers are what the numbers are unless there's a really good excuse.
 
 Nancy Cavey [00:13:45]:
 Because when you appeal and you ultimately get in front of a judge, all the judge is going to determine is whether that amount of income that you're getting is SGA and then send it back to the local office for determination of disability. Now, let's say you're a real estate agent collecting rent and Social Security disability benefits. A disabled individual getting Social Security disability benefits can legally own both personal and rental property and earn money from those rental payments. So in general, the asset ownership and the unearned income, such as passive rental income, is not considered to be a problem in the world of Social Security. But as I've said, the exception is if you're a real estate agent and you are. The rental income you're earning in the course of your trade as a real estate agent will be problematic because it's going to be considered earned income and potentially proof that you're actively engaged in work. So I want you to understand that as a real estate agent, I know you've worked very hard to get your license, you've established contacts in the community, and it's hard for you to give up that income that you're earning. But you may just, quite frankly, may have to.
 
 Nancy Cavey [00:15:01]:
 Because if you are continuing to work as a real estate agent at applying for Social Security, the commissions that you earn very well can disqualify you from benefits. I mean, you may have a really big hit or you may have a low hit, but that low hit is consistently over 1620. You're not going to be eligible for your Social Security benefits. And again, the more active you appear to be working in a rental or real estate business, the less likely it is that Social Security is ever going to approve your claim. I think it takes very careful planning if you're a real estate agent before you stop work and apply for your benefits. I think it's really Important that you're consulting with an experienced Social Security disability attorney to figure out what have your commissions been today? Is that over sga? Because they're going to look at that monthly and quarterly. What commissions do you have in the, in the pipe, if you will? When will they be paid? Are they commissions paid at the time of the sale? Are they somehow staggered over time? Are you splitting the. The commission? What's the net commission and potentially what expenses do you have associated with the sale of that particular property that you could argue would reduce your, your amount of your net, your gross income and get that net income under 1620.
 
 Nancy Cavey [00:16:32]:
 So lots of things I think that need to be taken into consideration if you're a real estate agent and thinking about applying for Social Security disability benefits. Got it. Let's take a break.
 
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 Nancy Cavey [00:17:35]:
 Welcome back to Winning Isn't Easy. Let me tell you the story of an administrative law judge who awarded benefits at a hearing after ruling that self employment income selling wellness products online did not constitute significant or substantial gainful activity. When you apply for your Social Security disability benefits, the Social Security Administration is going to determine if you worked after the date you've claimed you are disabled and if so, whether what you've earned disqualifies you for benefits because it's what's called substantial gainful activity. Now the Social Security Administration has developed criteria for the presence of sga. So let's talk about post Social Security disability application self employment income and how that can doom your claim and that evaluation criteria that's used by the Social Security Administration in determining SGA for self employed individuals. All right, so we're going to talk about the law here. So I'm going to give you some sites. If you look at 20 CFR 404.1575, as you probably should, that's the starting point in the case of a Social Security claim for a self employed individual, earnings are not necessarily the primary consideration.
 
 Nancy Cavey [00:18:49]:
 They've got a three part test. Nothing can be easy, right? Number one, are you providing significant services which are when a person renders services that are significant to the operation of the business and receives a substantial income from that business and that's 20 CFR 404.1575 Parens A, Parens II Parens Little Roman numeral I. Now the second thing is comparability, which is when one's work activity in terms of factors such as hours, skills, energy efficiency, duties and responsibilities are compared to an unimpaired individual in their community in the same or similar business. So they're trying to figure out is your work activity really fully comparable to what it is you would do if you were not impaired and you were working for an employer, for example, in a same or similar business or a self employed individual. And that's 20 CFR 404.1575 parens A, parens two middle Roman numeral two. Now the last thing they're going to look at is worth. And that's the question of is your work activity, even though it's not comparable to that of unimpaired individuals, worth the amount that's shown in an earnings guidelines for employees when considered in terms of its value to the business or when compared to the salary that the owner would pay an employee doing the work that they were doing. So you know, what we have to understand here is that they're going to try to measure the intrinsic value and the extrinsic value, if you will, of the work that you are providing and what it's worth.
 
 Nancy Cavey [00:20:39]:
 Is it, are you being paid less, are you doing less, are your duties being accommodated? And how would that compare to what you would be paid as an owner or an individual if you were doing the same kind of work? And those are the three factors that are going to be considered. Now what does significant services mean? Again that's a definition that you'll find in the, in the 20 CFR. And the issue is this, is the business a sole proprietorship? Proprietorship and does it, does it involve anything other than farming? Okay, so we set the two parameters. Now the services provided to the business would be considered significant if the activity in managing the business is more than half their time, more than 45 minutes in a month, and if so, their services are going to be significant and disqualifying. So what we're doing here is looking at the nature of the services that are being provided and that is going to be measured in terms of activity. I would say management, I would say marketing, creating whatever it is you do to produce your product or to provide this service. So think about that and write it down, break it down and then kind of figure out how significant it is in terms of managing the business or the nature of the services that you're providing. Like if you're the creator and nothing happens unless you create it.
 
 Nancy Cavey [00:22:24]:
 And that's probably going to be a significant service. Now how about that word? Substantial income. That's one's net income minus the reasonable value of any significant amount of unpaid help furnished by others, impairment related expenses or unincurred business expenses paid by another individual or agency. It might be that you are having to pay somebody to provide you with some services or you may have to use adaptive equipment. Think about what it is that you additional expenses you're incurring because of your impairment. And then we've got to talk about countable income. Accountable income is going to be considered substantial gainful activity when it exceeds the amount shown in the earnings guideline for employees or when it's comparable to one's income before they were alleging disability or comparable to an unimpaired individual operating the same type of businesses. Obviously this is going to take a lot of thinking, a lot of number crunching and even potentially a consultation with a vocational rehabilitation specialist who can help answer some of these questions in the real world.
 
 Nancy Cavey [00:23:39]:
 So how does this really work in the real world? Well, it's fact dependent and we recently tried an issue in front of a judge who found that our client's self employment earnings did not constitute sga. So let me tell you the story of Christina who claims she was disabled is of December of 2023. She returned to self employment work about two years later almost. Well actually it was less than two years later and she was selling wellness products online and she worked only five hours a month and earned no more than $66 each month. She had also worked for five months for an employer as a title processor earning $1,680 per month, which was more than the amount of money she can make under the applicable SGA standards. So Social Security was analyzing her post onset work activity and determined that the work that she was doing, you know, doing this selling of the wellness products online, pushed her above the applicable level of earnings. And ultimately the judge noted that she had only done this work for as a title processor for a very short period of time and that didn't qualify her for earnings that were over sga. So we were able to throw out this title processing job where she was earning more than SGA because she hadn't done that job long enough.
 
 Nancy Cavey [00:25:24]:
 And the judge agreed that it was a trial work period and unsuccessful work period. Now the judge went through the analysis of whether her earnings that she was making because of the wellness products constituted sga. And the judge said, look, the wages are not necessarily the primary factor here, but what was to be determined was the nature of her activity and whether that activity basically demonstrated an ability to work and, you know, potentially deny the claim at step five. What the judge did, of course was heard her testimony about the nature of her work activity, the hours that she engaged in that activity, and she testified how others were able to do what she was doing with the products, the activities that they engaged in, learning about the products, marketing the products, processing orders, all that sort of stuff which were materially different than the way she was doing it. And ultimately the judge found that her self employment activity did not equate to SGA and ultimately found that she couldn't do other work in the national economy. That that wasn't other work in the national economy. You can hear that this is complicated. It's complicated if you are a real estate agent.
 
 Nancy Cavey [00:27:05]:
 It's complicated if you're doing self employment. Again, you really should be talking to an experienced Social Security disability attorney to learn whether this kind of activity could jeopardize your rights to benefits. And you're going to be asked lots of questions because that lawyer is going to follow the 20 CFR rules and regulations and ask you questions not because they're being intrusive, but because they need to know the answers to figure out whether you've got an SGA problem. Got it. Well, I hope you've enjoyed this episode of Winning Isn't Easy. If you found the episode helpful, please take a moment to to like our page, leave a review and share it with your family and friends. Please subscribe to this podcast. This way, you're going to be notified when a new episode drops.
 
 Nancy Cavey [00:27:48]:
 So thanks and join us please next week for another insightful discussion of Winning Isn't Easy. Thanks for listening.