OAR 150-316-0630: Scholarship Awards used for Housing Expenses

(1) If a scholarship award is used to pay housing expenses, the taxpayer may subtract the amount paid for such expenses from federal taxable income, but not in excess of the amount of the award included in federal taxable income. (2) For purposes of ORS 316.846 and this rule, “housing expenses” are the reasonable expenses paid or incurred during the taxable year by an individual for housing for the individual. The term includes expenses attributable to the housing (such as utilities and insurance) and not otherwise taken into account as a deduction on the federal income tax return of the individual. Housing expenses will be treated as reasonable to the extent the department determines the expenses are neither lavish nor extravagant under the circumstances. Example 1: Jasmine, a student at Oregon State University, receives a scholarship award that she includes in her federal taxable income. She buys a house close to the school. She uses part of the scholarship award to pay the mortgage interest and property taxes. She also uses part of the scholarship award to buy food and to fix the roof. Jasmine may subtract the mortgage interest and property taxes from her federal taxable income on her Oregon return if she does not claim them as itemized deductions on her federal return, but not in excess of the amount of the award included in federal taxable income. She may not subtract the food purchases and the cost of fixing the roof. Example 2: Louis, a student at Portland State University, receives a scholarship award that he includes in his federal taxable income. He rents an apartment with a roommate about three blocks from school. In addition to the rent he is responsible for half of the electric bill and for a monthly parking fee at the apartment complex. He also pays for half of the monthly fee to Rent-A-Center to rent a sofa and loveseat. He uses part of the scholarship award to pay for these housing expenses. Louis may subtract from his federal taxable income on his Oregon return the sum of his portion of the rent, his portion of the electric bill, the parking fees, and his portion of the monthly fees for renting a sofa and loveseat, to the extent such sum does not exceed the amount of the award included in federal taxable income.