(aka RENT YOUR HOME FOR FUN & PROFIT!)
By Gary Peck (YMM’s own RE expert)
Do you have a vacation home that is not used most of the year, and largely sitting vacant? Or, maybe you are an empty nester, still living in that large house with all those extra bedrooms. You might want to consider converting all that little-used space to CA$H !!
With the emergence of the ‘Shared Economy’, travelers are now more than ever turning to privately owned properties and/or rooms as an alternative accommodation to expensive hotels. And there are now a plethora of online websites that advertise and handle the business and advertising aspects of renting your space/property.
If you have a seldom-used vacation home available for much of the year, VRBO.com (Vacation Rentals by Owner) is a well-known sight that specializes in renting your entire property. Another well-known site for renting entire properties is Homeaway.COM (which recently acquired VRBO).
If you have an extra room or two in your residence that would make a good rental space, and you would like to host travelers, websites such as Airbnb.com, Roomorama.com, Homeaway.com and Tripaway.COM (an ‘aggregator’ site) might work for you.
Most of these rental facilitator websites advertise your property or space online, collect and remit to you the rental income, and charge you a fee.
Be sure to NAVIGATE THE RULES if you are going to become a Home Sharer. Consider city and local community rules and regulations, as well as your HOA rules. You may find that registration fees, permits and business licenses are required; or in some cases, Home Sharing may be outright prohibited. And don’t forget to have sufficient insurance – you want to consider dwelling, personal property, injury and liability/umbrella coverage.
And, of course, wherever there is money to be made, there are ALWAYS tax considerations (the tax collectors don’t take vacations)! You may be subject to state, county and/or city occupancy, bed or ‘transient lodging’ taxes. And, of course, Uncle Sam (aka The IRS) is entitled to his share. Unless you rent your property for 14 or fewer days, you may owe income tax on your rental income, too. You are, however, able to deduct costs directly related to your rental – fees, advertising, towels and sheets, etc; as well as a portion of expenses that you pay for the rental property or space in your home. Rental income and expenses are reported on Schedule E of Form 1040. Please consult with your YMM Tax Advisor for details on Schedule E reporting requirements.