4 Mistakes You Don’t Want to Make When Renting Your Home For The Holidays
Chances are, if you’re traveling for the holidays this year, you’ve considered renting out your empty home to make a few extra bucks. Holiday travelers can stay in your vacant home and you can make money off their stay. It’s a win-win.
But renting out your home for the holidays isn’t as easy as it sounds. There are plenty of things that can go wrong if you’re not careful.
Here are a few mistakes you don’t want to make when letting folks stay in your home for the holidays.
Renting out your house for more than 14 days in a year
The money that’s earned from renting out your personal home doesn’t need to be reported as income if you’re renting your home for fewer than 15 days. But if you’re renting out your home using Airbnb, the company sends tax forms documenting the income earned to the IRS. That means you could get a letter from the IRS asking you to pay your unreported income.
Fortunately, if your guests have stayed in your home for less than 14 days out of the total year, you can explain in a letter that the income isn’t taxable. Just attach proof. Always keep records.
If you do rent out your place for more than two weeks a year, the rent you collect needs to be included in your income. Your options for taking deductions will be limited, too, because it’s a personal home.
Not doing your due diligence
You need to do your research on any short-term occupancy rules or licensing requirements in your city before renting out your house or a room. If you’re renting out your home’s basement, it needs to meet legal egress requirements for a safe escape or the entry of a rescue person during an emergency.
Doing your research keeps you safe from any legal ramifications. Check to see what your insurance covers what you’re trying to do, too, to stay protected in case of a nasty situation.
Not having insurance coverage
Speaking of checking your insurance, it’s a good idea to have some type of home insurance that covers any damage short-term renters might cause. It’s one thing to wipe up a mess in the kitchen and another to pay for fire damage.
One potential insurance option is HomeAdvantage by AllState. But make sure to do your own research with your current insurance company to see if there are a few ways you can save.
Not having your home ready for renters
Renters are more likely to cause damage to parts of your home that are worse for wear, and inefficient appliances could come back to haunt you.
For instance, your home heating system makes up 42% of your utility bill. If renters crank up the heat and your HVAC service hasn’t been serviced, you’ll see a skyrocketing energy bill.
Based on current electricity price increases, air conditioning efficiency improvements can reduce electrical costs by up to 35%. You can save 30% more on home energy needs just by choosing the right roofing material and maintaining your roof. That said, service your appliances and perform maintenance around your home before you go anywhere for the holidays.
Renting out your home during the holidays while you’re traveling is a great way to make some extra money when you need it most. By avoiding the common mistakes listed above, you can make sure to reap the rewards of your short-term rental.