What defines the nature of rental income?

The definition of rental income is best captured by the notion of it being unearned income from the use of property. Rental income is generated when a property owner allows tenants to use their property in exchange for payment. This type of income does not require the owner to exert significant effort or provide personal services, distinguishing it from earned income, which results from actively engaging in work or services.

Unearned income is typically characterized by money received without the necessity of active involvement or labor, which aligns perfectly with the nature of rental income. The owner receives payment merely for the ownership of the property and the right to occupy it, rather than for performing work or services associated with the property itself.

The other choices relate to different forms of income that don’t accurately reflect rental income. Passive income does include rental income, but defining it solely as passive income does not emphasize the aspect of it being unearned from property usage specifically. Active income from sales or earned income from services rendered are inconsistent with rental income, as they involve directly providing goods or services in exchange for compensation.