If you’ve recently moved, you may be interested in keeping your former home and renting it out for profit. Maybe you’ve made a recent real estate purchase and are looking to make improvements and profit off of tenants. Will you need a license to rent your home? In short, yes, you will probably need a license, although laws vary by state. Learn more about how to rent out your home.
In most states, you will need some type of license to legally rent out your home. It varies state by state and even city by city, so research real estate and rental laws in your area. In some states, collecting rent without a license is illegal, and could result in serious fines, so it’s important to check first. You will likely need either a rental license, business license, landlord license, or a combination.
Building Permits and Inspections
You will probably have to contact your local municipality to change the status of your home and inform them that it will become a rental property. In most locations, you have to file a building permit with the local authorities. A government inspector will come out to perform a routine inspection to ensure that the home is suitable for occupancy. You may have to make certain changes to correct any violations that the inspector finds.
Insurance is another consideration – you’ll have to change or add to your insurance policy, from homeowner’s insurance to renter’s insurance. Rental insurance will very likely be pricier than homeowner’s insurance, so you should be prepared for that cost.
Renting Out Your House: Tax Implications
There are tax implications that you will need to consider when converting your home from your place of residence to a rental property. Tax codes can be complicated, so you may want to speak to your accountant for help navigating the process and to learn how to correctly file your taxes. You will have to report your income as a landlord as taxable income.
There are also tax deductions you can file as a landlord. Since your home is now a business of sorts, you can file for deductions on costs like repairs and maintenance, mortgage interest, property taxes, insurance, homeowner association fees, and utilities. Under most tax code, you cannot file deductions greater than the total sum of rent received that year, although there are exceptions.
Managing Your Property
Profiting off of your former home by renting it out is an attractive concept, but actually managing tenants, rent payments, maintenance, and more can be a handful. If you have a full-time job outside of this, it can be difficult to manage all of the responsibilities of a landlord.
Hiring a property management company can take that weight off of your shoulders. With a property manager, you can still profit off of your property without having to worry about managing tenants, collecting rent, and the many legal aspects of renting your home. If you’re looking for a property manager, contact Property Management Group today.