Need advice

[Bridgit]

As I am looking for a job and know that whatever I find will probably pay me less than my previous position, I am thinking of renting a room in my house to make ends meet. Do you have any advice regarding:

- choosing the right person?
- questions I should not forget to ask during interview?
- where to get a good sample rental contract to use?
- what should the person pay for (should rent and utilities be a flat fee ...)?
- anything else I need to consider?

No need to share horror stories. I've heard so many already.

Thanks for sharing the best/safest way to do this.

 

[memoriesbymichelle]

Well I can't offer a whole lot, but one thing is if you charge "rent" and call it that, then you have to claim that on your taxes as income. However, if you charge for utilities, or food, expenses if you will, that would be different and you would not have to count that as income.

As far as choosing people, you would have to interview them and then of course do a background check to make sure they aren't a criminal.

I believe you can get contracts online by just googling it.

Go with your gut, if you are going to share living space make sure you can get along with this person. Make sure you outline chores like keeping the bathroom clean, dishes, laundry and special hours if necessary. If you don't want to share food give them their own shelf in the fridge for their stuff and their own space in the pantry. Otherwise expect food to be gone that you thought was there if there aren't any boundaries. Spell everything out you can think of because there will be some things you will still forget. If possible ask them for references and call them to verify that they were good peeps before where ever they lived.

 

[sparkydave]

I would think there are some standard rental contracts you should be able to find online. You'll probably want to read up on renter's rights, like things you can and can't do if you get a deadbeat renter. On a whim once after seeing a commercial for it, I did a background check on myself; the site was beenverified.com. I do recall you have to call a number to cancel your free trial, but it was no biggie.

The tax wrinkle Michelle mentioned is one thing, but you'll probably want to check with your homeowner's insurance and make sure there are no gotchas there.

 

[dayhiker]

I've read other types of contracts on line. So you'll be able to find them there.

Best thing to to be very up front with people telling them what you want. Even if its embarrassing, just tell them what you expect. Save a lot of confusion later.

Back ground checks can also be done on line quite easily with minimal cost these days.

I'd says sign a tenant at will so you can each give each other a 30 day notice. But since the person is in your home if things go bad you can have the police remove them quickly. At least that's the way it is in MA. But each state probably is a little different.

Be sure to take an inventory of everything in their room that you provide them and have them sign it. You don't want them moving out with your furniture when they move out.

look on craidslist to see what rooms are renting for locally. Its your choice as to wither you want them to pay a set fee or rent and half of the utilities. Might be similar to collect one rent amount that to have to meet them with each utility and say now you own this much more, next week going over it again with the next bill etc.

 

[Bridgit]

Thank you all for your suggestions.

Is it worth renting if I'll have to pay taxes on that new income?

 

[blackribbon]

Better check with your town to see if a "rental" within your home is legal. That is different than a roomate situation and I believe some municipalities have legal requirements. If it is not a legal rental, then it won't matter what your "rental agreement" says because it won't hold up in court.

 

[iambren]

I believe the law says that if it is a rental the you CANNOT discriminate. That means you can't turn away a homosexual, a satanist etc--you can't pick and choose.

 

[memoriesbymichelle]

I believe the law says that if it is a rental the you CANNOT discriminate. That means you can't turn away a homosexual, a satanist etc--you can't pick and choose.

Probably depends on the state, and I would agree if it is a separate housing unit, but if you are renting a room out, you are letting basically a stranger in your house, you cannot be forced to let any old person reside within your same walls.

 

[memoriesbymichelle]

Thank you all for your suggestions.

Is it worth renting if I'll have to pay taxes on that new income?

well if you call it "rent" you will have to pay taxes on it as you claim it for income. Also the tenant can claim a deduction as well, so you would have to give them a form at the end of the year and you might also have to pay sales tax on it as well. That's why I suggested that you call it "expenses" or utilities and expenses.

 

[AvilaSurfer]

You absolutely CAN discriminate if it's your own home. I wouldn't say "You're [whatever] so I'm not renting to you." That would cause problems, but you would win in court. The best advice I can offer is to pay for a background check. There are lots of companies that will do them for 30-40 dollars.

 

[Bridgit]

A lot of people in my subdivision are renting. I know that it's legal here. My main concern is if it will be a good mean to meet my financial obligations.

Thanks all.