Real Property: Renting Your Home
You can rent all or part of your home, on either a long term or short term basis. A rental brings in cash, and companionship. If you're not up to it, you can hire a broker to do the rental for you and/or a manager to take care of ongoing needs,
You can even turn your home into an assisted living facility if you need, or will need, assistance. You get the benefit of an income, companionship and assistance.
Before you take either action, check to find out if what your are considering is legal in the area in which you live. Check with the local government entity, homeowners association, and/or your landlord. Ignorance of the law is not an excuse.
- If your home is in a neighborhood which is zoned for single family dwellings, you may have to obtain a special exception. Typically you also have to get a permit for any necessary construction and meet building-code requirements, have adequate off-street parking, and possibly purchase a residential housing rental license.
- If you do not obtain the necessary permit, you could be fined or ordered to stop renting. If you want to evict a tenant who does not follow the lease terms, a judge could find that the lease was illegal and refuse to enforce it.
If you are renting to other people on a short term basis: consider applying for a license if the law requires you to be licensed as an inn or bed-and-breakfast.
If you are a renter, check your lease. If you are in a condominimum or a coop, check to see whether it is okay.
Be sure to change your Homeowners Insurance policy to include the risk of liability to the tenant or the tenant's guests.
For additional information, see:
- Alternatives For Renting Your Home And How To Find Renters
- How To Set The Rental Amount
- Management Of The Property
- Pitfalls To Watch For When Renting Your Residence
- Taxes On Renting Your Residence
- Insurance If You Rent Your Residence
- Turning Your Home Into An Assisted Living Facility
- You could be liable if your tenant or one of your tenant's guests is injured on your property. Homeowners/Renters insurance does not generally cover business in your residence. Contact your broker and/or insurance company to find out if your policy can be amended to cover these risks.
- Because of the Small Business Jobs Act of 2010, renting a home is deemed to be a business for tax purposes. Even if you only own one rental property, you must file a form 1099 for any service provider (such as a gardner) who is paid more than $600 during the year and give a copy to the provider. A Social Security Number of taxpayer I.D. is required for the form. For more information, speak with your accountant or contact the IRS at 800.829.1040