When Your ‘Income Property’ Isn’t: Accounting for Your Money-Losing Rental Property When it Comes to Calculating Child Support in Florida

Today, more than ever in recent memory, people have side businesses. Perhaps they drive for Uber, housesit, walk dogs, deliver groceries or have some other freelance gig. For others, it’s owning rental property, as changes in the economy have made owning rental property very attractive in recent years. Whatever your side business, it is important to understand how it can impact other aspects of your life, such as your child support obligation. Obviously, if your side business is profitable, that has the potential to raise your child support obligation. What about, however, a business that is losing, not earning, money? The law in Florida may be able to help you… if you know how to advance your case properly. For that, be sure you have the services of a skilled Fort Lauderdale child support attorney.

Such was the case for S.S. Before she got married, S.S. purchased a townhouse property. Fast forward several years and S.S. had gotten married, had a child and gotten divorced. At this point, S.S. still owned the townhouse but was using it as a rental property. Although she had a tenant in the townhouse, the mortgage payments and maintenance fees on the place were so high that, even with the rental income, S.S. was still losing money every month on the property.

That townhouse “in the red” became an issue when it came time to litigate S.S.’s divorce from A.M. In order to set child support in any case in Florida, the court needs to make determinations about the money that is available to support the child. That includes making a finding about the father’s gross income and the mother’s gross income.

Negative rental income counts just the same as positive rental income

In S.S.’s case, the trial court did not include her monthly losses on the townhouse in calculating the mother’s monthly gross income. That was a legal error, according to the appeals court. Gross income calculations definitely include income from rental properties “in the black.” Given that and given that “the purpose of calculating income under that section is to ascertain how much money is available to support the child,” the judges on the appeals court panel could point to “no justification for failing to account for negative rental income just as we would account for positive.”

This makes logical sense. If a parent has an “income property” that is making money every month, she has more money on hand to support the child. If her rental property is losing money, then those losses are eating away at her other income and reducing the total pool of wealth available to support the child.

One very important thing to note about your child support case where business losses are a potential issue: you need “hard proof” of your business losses in for the court to count them. An Orlando-area case from 2018 made that very clear. The father’s business losses were not factored into child support in his case because all he had to back his claims that his business was “in the red” was his own testimony. That wasn’t enough.

If you have a rental property like S.S. did, giving your trial judge “competent, substantial evidence” of your losses may not necessarily be arduous or complicated. Proof of the rent you’re charging, along with evidence of all your expenses (like the mortgage payment on the property and other mandatory fees) possibly could be adequate to establish your loss competently. In other situations, though, like when you own a business, the evidence you need may be more extensive. Your legal counsel can help guide you through the process of proving your losses.

Whether you are the parent who is potentially receiving a child support payment or making it, there’s a lot that goes into calculating what the proper support amount should be, including proof of your income and your spouse’s income. To make certain you are getting all of your evidence in front of the judge to ensure yourself a fair result, call upon the knowledgeable South Florida child support attorneys at Sandy T. Fox, P.A. Contact our attorneys online or by calling (800) 596-0579 to schedule your confidential consultation.

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