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Old 07-17-2010, 10:00 AM
 
6 posts, read 13,577 times
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Hi,

My wife and I recently moved in to a new home in West Irondequoit.

Does anyone have any experience renting out a room of their primary residence? I'm looking for any tips or help on the legal, tax, or insurance implications of renting out a room (rest of the house would be open to their use apart from our bedroom).

This is a one time thing for a good friend who is wrapping up their Ph. D. We are comfortable with the personal implications (food / storage / chores / noise / visitors / parking /cleanliness / etc) but neither of us know much about the other implications.

Thanks for any help! Please let me know if any additional details would help.
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Old 07-17-2010, 11:03 AM
 
3,234 posts, read 7,631,997 times
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I've done this with my house to friends. I didn't have a lease and they paid in cash or check each month. No taxes or insurance. I have been told it was legal since there was not a separate entrance for them and they shared the house (but don't take my word for it since I didn't research it that much).
The only problem with this would be if the friend trashed something or got behind on bills. I never had this problem but I could imagine this would be an issue for some.
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Old 07-20-2010, 05:45 PM
 
169 posts, read 424,139 times
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The income you receive as rent is taxed as ordinary income. You would need to fill out federal Schedule E (which deals with rental property) if you wanted to try to offset this additional income with any additional rental related costs you incur (though this seems a stretch if all you have is a border).

Check your homeowner's policy carefully but I bet that having a border does not negate any of the coverages provided in it.
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Old 08-20-2010, 10:08 AM
 
6 posts, read 13,577 times
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Thank you for the help! I read through the homeowner's policy several times and noted no issues.

Our border will be moving in soon. Any recommendations on where to find an agreement for this sort of thing? I looked at Texas Rental/Lease Agreement (Residential) Form - LawDepot.com, and it looks like they let you customize a bit. Any issues with using something like this? I'm guessing I should draft up an addendum to cover rules/expectations/duties etc.

Thanks again for any help
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Old 08-20-2010, 11:36 AM
 
525 posts, read 1,645,147 times
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Quote:
Originally Posted by Bowkr View Post
Hi,

Does anyone have any experience renting out a room of their primary residence? I'm looking for any tips or help on the legal, tax, or insurance implications of renting out a room (rest of the house would be open to their use apart from our bedroom).
I am not a lawyer and cannot provide advice, but depending on the zoning designation of your neighborhood, the town might have an issue with multiple families living at the same address.
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Old 08-20-2010, 12:16 PM
 
6 posts, read 13,577 times
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rochacha - had me scared for a moment Looked through the code and couldn't find anything (R-1 district in Irondequoit).

I gave them a call though, and they said it would be perfectly fine. It's not like we're setting up a separate unit, they are simply renting a bedroom and sharing the rest of the house, utilities, etc.
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Old 08-20-2010, 02:47 PM
 
525 posts, read 1,645,147 times
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Quote:
Originally Posted by Bowkr View Post
rochacha - had me scared for a moment Looked through the code and couldn't find anything (R-1 district in Irondequoit).

I gave them a call though, and they said it would be perfectly fine. It's not like we're setting up a separate unit, they are simply renting a bedroom and sharing the rest of the house, utilities, etc.
Didn't mean to scare you! I knew someone who wanted to buy a house with an in-law apartment that wasn't on the certificate of occupancy or something like that. They had to go before the Zoning Board to get it and it had a condition that only a blood relative could live there. It was a different town, but that is what triggered my concern.
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Old 08-20-2010, 04:54 PM
 
169 posts, read 424,139 times
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The law tends to pretty lenient as to true boarding situations so I am not surprised. Second units are another matter.

I cannot give you legal advice, but the key is to be extremely clear about rights, duties and expectations. Courts interpret agreements in light of their understanding of the parties' intentions as expressed by the lanbguage of the agreement itself. So, it is important to spell these items out as clearly as you can.

How much rent is due? how frequently is it to be paid? what happens if rent is late? how long is the tenancy to continue (12 months? 6 months? month-to-month? at-will of the owner upon reasonable notice to vacate?) What rights does the boarder have to the kitchen? to other common areas? what are the parties' expectations concerning pets, visitors, noise, tv and internet privileges, plates and glasses, the dishwasher, shared household duties, if any? I am sure you can think of a dozen other issues that might come up.

I would definitely start with a form lease as you propose to do and customize it to meet my own needs.
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Old 08-22-2010, 08:20 AM
 
Location: Rochester NY (western NY)
1,021 posts, read 1,617,360 times
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So you voluntarily want to give up some of your rent income to the state? If it's a friend and someone you can trust (going for a PhD, I sure hope they're decent and trustworthy) then screw it, just tell them you want $XXX every Xth of the month and call it a day and enjoy some extra pocket cash.

Make it easy on everyone and just ignore any idea of making it "on the books".
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