In the tough economic climate of the past several years, many people sought to earn extra funds by renting out an extra room in their home, condo, or apartment. Though some city ordinances prevent such arrangements, landlords who are permitted to share space with their tenants should keep several tips in mind. Ideally, the person looking to find a renter will do so through friends and acquaintances so they have a recommendation from someone they trust. If that doesn’t find someone, placing an anonymous ad online that describes the living situation and any other pertinent information, is another option. After placing the ad, which should also request some information about prospective tenants, review the applications and respond only to the ones that seem likely to work out. Due diligence in this situation is absolutely vital, regardless of how the renter is found, and should include credit, criminal, and civil lawsuit checks, as is checking the sex offender database. Calling past employers and landlords is also a wise step. Those potential tenants that pass these initial checks should be interviewed several times, giving tenant and landlord the opportunity to get to know one another and discuss potential issues like noise, guests, bills, and other house rules. Once a candidate is chosen, both parties should sign a written lease, which should include the rent, due date, and lease term, as well as any explicit rules, such as parking, guests and chores. A security deposit should be obtained, and if possible, a state Association of Realtor’s lease, credit application and any other needed disclosures, which can be obtained from a real estate sales professional. When adding a renter, it is also necessary for the individual who is renting out a space to add the Rental Property Schedule E to his or her yearly federal income tax filing. It is best to get the help of a tax professional, and take advantage of those items that can be written off with the home being partially a rental property. | Read More