Under certain circumstances, the United States Department of the Treasury will provide emergency rental assistance payments to aid taxpayers. There are specific tax rules that pertain to this situation.

The Consolidated Appropriations Act, 2021, allows states and political subdivisions, U.S. territories, Indian tribes, and the Department of Hawaiian Home Lands to use certain funds allocated by the Department of the Treasury to provide emergency rental assistance to households that require financial assistance to pay rent, utilities, home energy expenses, and other related expenses. The ARPA appropriated additional funds for this purpose. Payments under either provision are referred to as “emergency rental assistance”.

A renter who received emergency rental assistance payments for use in paying their rent, utilities or home energy expenses is not taxed on the payments, whether paid to the renter or directly to the landlord and/or utility provider.

A landlord who receives these types of payments must include them in gross rental income.