What You Need to Know About FL-150 Rental Income
FL-150 rental income must be reported in Section 6b of California’s Income and Expense Declaration form. Here’s a quick summary:
- Where to report it: Section 6b (Investment Income), not Section 7 (Self-Employment)
- What to enter: Average monthly gross rental receipts minus cash expenses
- How to calculate the average: Add up all rental income from the last 12 months, then divide by 12
- What you can deduct: Mortgage interest, property taxes, insurance, maintenance, management fees
- What you cannot deduct: Depreciation or personal expenses
- What to attach: A separate schedule for each property showing gross receipts minus cash expenses
If you own rental property and you’re going through a divorce or support case in California, you already have a lot on your plate. The last thing you want is to make an error on a sworn legal document.
The FL-150 — California’s Income and Expense Declaration — is required under Family Code §§ 2030–2032 and 2100–2113 whenever the court is making decisions about child support, spousal support, or attorney fees. Everything on it is signed under penalty of perjury.
Rental income has its own rules on this form. It’s treated differently from wages, differently from self-employment, and the documentation requirements are specific. Getting it wrong — even accidentally — can hurt your credibility in court and affect how much support you pay or receive.
This guide walks you through exactly how to report rental income on the FL-150, step by step.
Reporting FL-150 rental income: Where and How
When a landlord opens the FL-150 Income and Expense Declaration, the first instinct might be to list rental income under “Self-employment” in Section 7. However, unless the person is running a full-scale property management corporation as their primary business, California courts generally require rental income to be disclosed in Section 6b, titled “Investment Income.”
Section 6 is designed for passive or semi-passive streams of money. This includes dividends, interest, trust income, and, most importantly for our purposes, FL-150 rental income. The form asks for two specific figures: the amount received “Last Month” and the “Average Monthly” amount.
The “Last Month” figure is straightforward—it is the actual cash that hit the bank account in the most recent month. But the “Average Monthly” figure is where most people get tripped up. This isn’t just a guess; it is a mathematical calculation based on the last year of ownership. For more details on the nuances of these declarations, you can read more info about FL-150 declarations to ensure every box is checked correctly.
Calculating FL-150 rental income for Section 6b
To find the correct “Average Monthly” figure, a landlord must look back at the last 12 months of rental activity. The process involves:
- Totaling Gross Receipts: Add up every dollar of rent collected from all tenants over the last 12 months.
- Subtracting Cash Expenses: Deduct the actual out-of-pocket costs (mortgage interest, taxes, repairs) paid during that same 12-month period.
- Dividing by 12: Take that net annual total and divide it by 12.
This calculation accounts for variable income, such as months where a unit might have been vacant or months where a major repair (like a broken water heater) ate into the profits. The court wants to see the “net cash flow” available for support, not just the high-water mark of a good month.
Handling multiple rental properties
If a party owns a duplex in Costa Mesa and a condo in Newport Beach, they cannot simply lump the numbers together into one illegible scribble. The FL-150 requires a separate schedule for each piece of property.
This schedule should be an 8.5-by-11-inch sheet of paper labeled “Attachment 6b.” On this attachment, the landlord should list the property address, the gross receipts, and an itemized list of cash expenses for each specific location. If there are five properties, there should be five clear breakdowns. The aggregate total of all these net monthly averages is what finally gets written on the main FL-150 form in Section 6b.
Calculating Deductions: What Counts and What Doesn’t
One of the biggest points of contention in Orange County family law cases is what a landlord is allowed to “write off” on their FL-150 rental income report. It is vital to remember that “taxable income” (what the IRS cares about) and “income available for support” (what the judge cares about) are two very different things.
The “No Depreciation” Rule in California Support
In taxes, depreciation is a landlord’s best friend. It allows a person to claim a “paper loss” as the building ages, even if the property is actually increasing in value. However, in California support litigation, the landmark case Marriage of Hein established that depreciation is a non-cash expense.
Because depreciation doesn’t actually involve money leaving a bank account, the court will “add it back” to the income. If a landlord’s tax return shows they made $50,000 but claimed $20,000 in depreciation, the family court will likely view their income as $70,000. When reporting FL-150 rental income, do not subtract depreciation. Stick strictly to “cash expenses”—money that actually left the pocket.
Personal Expenses and Mixed-Use Properties
It is common for landlords to try and deduct personal expenses that are tangentially related to the property. For example, a landlord might try to deduct their entire personal cell phone bill because they occasionally text a tenant, or their entire SUV payment because they drive to the hardware store once a month.
California courts are skeptical of these “mixed-use” deductions. Generally, if an expense is personal, it is not deductible from rental income for support purposes. Judges often apply “add-backs” for the personal portion of cell phones, vehicles, or home offices. Understanding how child support is calculated in California is essential here, as these add-backs can significantly increase the “disposable income” the court uses in its math.
Documentation and the Role of Tax Returns
A sworn statement is only as good as the paper trail behind it. For FL-150 rental income, the court requires specific attachments to verify the numbers. If a party fails to provide these, the other side’s attorney—or the judge—may ask for a “continuance,” which just drags the case out longer and increases legal fees.
Documenting FL-150 rental income with Schedule E
The “Gold Standard” for verifying rental income is the federal tax return, specifically Schedule E (Form 1040). This supplemental income form lists the rents received and the expenses claimed for the previous tax year.
While Schedule E is incredibly helpful, it has two major caveats:
- The Depreciation Issue: As mentioned, the judge will ignore the depreciation line on the Schedule E.
- The Time Gap: A 2023 tax return might not reflect a 2025 reality. If a tenant moved out in January, the tax return is outdated.
When submitting these documents, always remember the “Privacy Rule”: Black out all Social Security numbers on every attachment to prevent identity theft in public court records.
When Rental Income Changes Significantly
If the rental income has changed significantly in the last 12 months—perhaps due to a major renovation, a long-term vacancy, or a significant rent hike—this must be explained in Section 9 of the FL-150.
Section 9 is the “Change in Income” area. It allows the landlord to explain why the “Average Monthly” figure might be misleading. For instance, if a property in Irvine CA was vacant for six months but is now rented at a premium, the 12-month average will look lower than the current reality. Transparency here prevents the appearance of “hiding” income.
How Rental Income Affects Support and Property Division
The final number calculated for FL-150 rental income is fed directly into the state’s “Guideline” support calculator. In California, child support is calculated using a complex algebraic formula that weighs both parents’ incomes and their percentage of “timeshare” with the children.
Rental Income vs Self-Employment Income
While rental income goes in Section 6, true business income goes in Section 7. The distinction is important because Section 7 (Self-Employment) requires the attachment of a Profit and Loss (P&L) statement or a Schedule C.
If a landlord also provides significant services—like a bed and breakfast or a short-term rental where they provide daily cleaning and meals—the court might treat it more like a business (Section 7) than a passive investment (Section 6). For most landlords, however, keeping it in Section 6 is the standard procedure. To see how these numbers impact the bottom line, you can use a California child support calculator to run different scenarios.
Consequences of Underreporting or Misreporting
The FL-150 is signed “under penalty of perjury.” This is not a suggestion; it is a legal mandate. If a landlord is caught underreporting FL-150 rental income, the consequences can be severe:
- Sanctions: The judge can order the dishonest party to pay the other side’s attorney fees.
- Credibility Loss: Once a judge catches a party in a lie about money, they are unlikely to believe that party about anything else, including custody or asset division.
- Evidence Code 412: This rule allows a judge to distrust “imprecise” financial evidence if the party had the ability to provide better, more accurate proof but chose not to.
Accurate reporting is the best way to ensure a fair outcome. For those facing complex support issues, seeking legal services for child support is a proactive step toward protecting one’s financial future.
Frequently Asked Questions about Rental Income on the FL-150
Can I deduct depreciation from my rental income on the FL-150?
No. While the IRS allows you to deduct depreciation to lower your tax bill, California family law does not allow it for support purposes. Because depreciation is a “non-cash” expense (you aren’t actually writing a check for it every month), the court considers that money “available” to support your children or former spouse. Per the Marriage of Hein ruling, these amounts are added back to your gross income.
What if my rental property is currently vacant?
You should still report the 12-month average in Section 6b. If the vacancy is expected to continue, or if you just lost a long-term tenant, use Section 9 to explain the situation. You can note that while the 12-month average shows income, the current “Last Month” income is zero. Be prepared to show proof of your efforts to re-rent the property, such as active listings.
Do I need to attach a separate schedule for every property?
Yes. The FL-150 is a summary document. The “Attachment 6b” is where the actual evidence lives. For every property you own—whether it’s in Tustin CA, Placentia CA, or Newport Beach CA—you must provide a clear breakdown of gross receipts minus cash expenses. Clear labeling and itemization help the judge (and the other side) understand that your numbers are honest and verifiable.
Conclusion
Navigating the financial disclosures of a California divorce is a daunting task for any landlord. The FL-150 rental income requirements are designed to ensure total financial transparency, and the court expects nothing less than a full, sworn declaration of every dollar coming in and going out.
From calculating the 12-month average to correctly “adding back” depreciation, the details matter. Errors on this form can lead to inflated support payments, expensive sanctions, and a loss of credibility that can haunt a case for years.
At Pinkham & Associates, APLC, we have spent over 25 years providing fearless advocacy for clients in Orange County, Irvine, and throughout the region. We understand the complexities of investment income and the nuances of the California Family Code. Whether you are dealing with asset division, child support, or spousal maintenance, our team is here to provide the personalized strategy you need to protect your properties and your future.
If you are struggling to complete your financial disclosures or believe the other party is hiding rental income, don’t go it alone. Navigate your FL-150 with professional help and ensure your rights are protected. We offer free consultations to help you understand your next steps.
