You have often heard about friends and family that renter out their extra room on AirBnB, or a sublease of a room on Craigslist. Homeowners who have the extra room that isn’t being used, it may seem like an excellent idea to rent out a spare to make some extra cash. This choice can also make more expensive homes become more affordable, as you’ll have help paying the bills. This is very common practice in cities like Seattle, Los Angeles, or San Francisco where homes are prohibitive expensive.
This may seem like the perfect arrangement, but there are some risks associated with it, and you need to know what you’re getting into before you make this choice. Read on to review the risks of renting out a spare room and some tips to help make your life easier if you decide to rent out.
THE RISK OF RENTING OUT THE SPARE ROOM
In the case of AirBnB room rental, or a sublease of the spare room for a medium or long term arrangement to pocket the extra cash, it always comes with a catch.
Rent is taxable income
The rent that you make from the short term, or long term room lease is taxable. Unfortunately, Uncle Sam wants a cut in everything.
It is true that you can deduct certain expenses, such as repainting a room, you have to report and pay taxes on the income you make through your rental. However, you can’t deduct more than you make, and if you do your taxes incorrectly, you’ll pay legal fees to the IRS. Because of this, it might be beneficial to talk to a tax attorney before listing your room and afterward to ensure there’s no accidental misconduct the next time you file.
Legal implications
In some cities, neighborhood or HOAs will not allow you to rent out the room, or sublease the room. However even in the event that it is allowed, there are governance that covers room rentals, or sublease as there are minimum standards with state and federal housing laws.
In the event that the renter is injured, or something goes missing during the rental duration. There will be insurance and legal remifications that one will need to address.
Incompatible tenant
There is no magic bullet when it comes to compatability. Everything might look amazing on paper but when you get to know the persona nd you find out that he/she is not compatible, it will create alot of stress and fiction.
There is also no easy way to address compatibility with the new roommate other than setting up more rules in a house that you own, which is never fun.
Tenant that refuse to leave
We have heard and seen cases where the room renter is not paying rent and then decides to not move out. You can evict them, but the eviction proceedings in Texas take a long time and can be strict, leaving you to wait on proceedings and live with them all the while.
Work with Apogee Properties
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