Legal Question in Real Estate Law in California

Re: The effects of house rent income

A quick review of the Unemployment Insurance Code does not show any provision making one ineligible for unemployment because of receiving rental income. Of course, if you worked full-time managing rental properties, you would be considered employed or self-employed and thus ineligible.

Net income from rentals may be treated as 'passive' income for federal income tax purposes and thus could not be offset by losses from non-passive sources. This is a technicality that probably won't affect you and should not be a major decision factor unless your circumstances are unusual, in which case you probably already have a tax advisor.

More important questions are whether the rental activity will produce positive cash flow for you and whether the effort of being a landlord is worth the headaches.

I suggest you do three things: (1) Make a realistic budget for the proposed rental activity, including an allowance for depreciation in accordance with what the IRS allows; (2) Discuss the tax aspects with a tax advisor -- even the corner H&R Block office can give decent advice on residential renting; and (3) Buy and study a 'self-help law' book on how to be a landlord.