Today, renting a room in your house (or the entire house) to unknown travelers isn’t an outlandish concept. Short-term rentals offer an income opportunity for owners and a unique opportinity for visitors to experience a city. What better way to get the local experience than staying – or renting from – locals?
Points to consider Prior to Renting Your Home on a Short-Term Rental Site
If you think you’re up to being a host of a short-term rental, listed here are three points to keep in mind.
1. Legality
The increase in popularity of AirBnB along with other sites hasn’t been without its controversy. There are actually concerns that short-term rentals threaten the jobs of hotel workers, and over the fact that a short-term rental host doesn’t need to pass the same certifications and inspections of regular hotels. Finally, many investors are buying properties with the intent of renting them out, which will take housing off the market in areas with already limited inventory (Check out this article from The Los Angeles Times to find out more).
Some cities have enacted restrictions against short-term rentals. You may need to register and get a permit or a license – or you might not be able to host in any way. Check with your local government to ensure that you understand the laws.
2. Taxes
You don’t need to report the money earned from the short-term rental of your home when you meet these two requirements:
1. You rent it out for less than 15 days a year AND
2. You live in it for longer than Fourteen days or more than 10 % of the total days you rent it out during the year (this determines if the property is seen as a residence or a rental property by the IRS).
Still unclear about the taxes on your short-term rental? You really should speak with a tax professional. Here are two resources to begin with from Forbes and TurboTax.
3. Additional Costs
Renting out your home could mean an additional insurance bill. Check what your present policy covers regarding short-term renters together with your insurance agent. They could recommend increasing coverage. AirBnB provides free primary liability coverage for up to $1,000,000 per occurrence, and several of the other sites have partnerships that make it easy to take out additional coverage, as needed.
In addition to insurance, you’ll have to pay a percentage of the rental income to the website: AirBnB and FlipKey both charge a 3% host service charge, VRBO has an choice to pay-per-booking or an annual subscription fee.
Searching for a permanent home within your favorite vacation spot? Nick & Cindy Davis with RE/MAX Premier Group are here to assist you here in the Tampa Bay and Surrounding Areas. We are always just a click here or call to 813-300-7116 away.
