Legal Considerations to Make About Renting a Room in Your Home
Renting out a spare room in your home is a great way to bring in extra income while providing someone with a place to live. Before you proceed, it’s a good idea to talk with a legal expert like Suzzanne Uhland so you know just what you’re getting into and what you should think about from a legal POV.
Familiarize Yourself With the Laws in Your Area
Do yourself a favor and find out what the laws are in your local area regarding renting out rooms in your home. For instance, even though you own your home and the room you’re renting, you might have to give your tenant notice that you’ll be coming into her or his room. If you don’t and your tenant doesn’t take kindly to your unannounced intrusion, you might find yourself in legal trouble.
Do a Background Check
No matter how polite and friendly a potential tenant might be when you first talk with her or him, do your due diligence and perform a background check anyway. Checks let you know if someone has been evicted in the past and what her or his credit score is in addition to similar background information. The information you find gives you a better idea of the type of person who might one day be living under your roof, and performing a check could give you peace of mind.
Don’t Forget About Taxes
As you’re interviewing potential tenants and before you accept any type of payment, sit down with an accountant to find out what kind of taxes you’ll have to pay for renting out a room in your home. Besides bearing your tax bracket in mind, you’ll also want to remember you have to pay state and local income taxes. Depreciation, maintenance, advertising, insurance, repairs and utilities are a few things that can reduce your tax bill, but make sure you know for a fact what is and is not considered deductible.
Create a Lease
It’s best that you and your tenant are on the same page from the very beginning. Create a lease that spells out how much rent is every month, rules of the house, any restrictions you have in mind, whether your tenant can have guests and the penalties for paying rent late. Here is where you’ll want to have a lawyer look over the lease to make sure it’s fair, legally binding and to make sure you didn’t leave anything out. Additionally, be sure you include terms in the lease for when you have to evict a tenant.
Do Your Part to Be a Good Landlord
It’s best that you treat your tenant more like a guest and less like an extra source of income. This means making sure your home is in good repair, that the heater and air conditioner work and that your home is free of mold and mildew. Not only does taking care of your tenant reflect well on you, doing so can prevent your tenant from becoming hurt or sick while living in your home, which can result in legal troubles.
Ask for a Deposit
Deposits aren’t just for when tenants move out. By asking for a security deposit along with the first rent payment, you can save yourself the financial headache of having a tenant skip out on you at the beginning of the lease or towards the end. You can use that deposit to cover any bills or expenses you’d planned to use the tenant’s rent money on.
Make sure all your legal bases are covered before opening your home to a renter. Being well-prepared and taking with legal experts better ensures you don’t run afoul of a terrible situation in the future.