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You can rent all or part of your home, on either a long term or short term basis. A rental brings in cash, and companionship. If you're not up to it, you can hire a broker to do the rental for you and/or a manager to take care of ongoing needs,

You can even turn your home into an assisted living facility if you need, or will need, assistance. You get the benefit of an income, companionship and assistance.

Before you take either action, check to find out if what your are considering is legal in the area in which you live. Check with the local government entity, homeowners association, and/or your landlord. Ignorance of the law is not an excuse. 

  • If your home is in a neighborhood which is zoned for single family dwellings, you may have to obtain a special exception. Typically you also have to get a permit for any necessary construction and meet building-code requirements, have adequate off-street parking, and possibly purchase a residential housing rental license.
  • If you do not obtain the necessary permit, you could be fined or ordered to stop renting. If you want to evict a tenant who does not follow the lease terms, a judge could find that the lease was illegal and refuse to enforce it.

If you are renting to other people on a short term basis: consider applying for a license if the law requires you to be licensed as an inn or bed-and-breakfast.

If you are a renter, check your lease. If you are in a condominimum or a coop, check to see whether it is okay. 

Be sure to change your Homeowners Insurance policy to include the risk of liability to the tenant or the tenant's guests.

For additional information, see:


  • You could be liable if your tenant or one of your tenant's guests is injured on your property. Homeowners/Renters insurance does not generally cover business in your residence. Contact your broker and/or insurance company to find out if your policy can be amended to cover these risks.
  • Because of the Small Business Jobs Act of 2010, renting a home is deemed to be a business for tax purposes. Even if you only own one rental property, you must file a form 1099 for any service provider (such as a gardner) who is paid more than $600 during the year and give a copy to the provider. A Social Security Number of taxpayer I.D. is required for the form. For more information, speak with your accountant or contact the IRS at 800.829.1040

Alternatives For Renting Your Home And How To Find Renters

Renting all or part of your home allows you to retain ownership while generating additional income or decreasing the costs of maintaining your home.

Ways to rent all or part of your home include:

Rent to a roommate or boarder: 

  • This will not only reduce your monthly household costs but may even give you some companionship.  (Of course, this could be a downside as well).
  • You can find a roommate/boarder by getting the word out to everyone you know, and/or listing in your local newspapers or on such internet sites as Airbnb offsite linkor  Craigs List: offsite link.

Use an extra bedroom(s) as a bed-and-breakfast. You gain the advantage of renting the room only when it suits you. You can find guests by registering with bed and breakfast services over the Internet. For example, a few of the most popular are:

Rent the whole place or part to travelers with no food. Travel-booking websites that list hotel alternatives such as a house, condo or even a couch include:

 Rent an apartment in your house, or live in the apartment and rent the larger part of the house. 

  • If you don't already have an apartment in your home, consider making one in your garage, basement or attic. A local contractor can give you an idea how much it would cost.

  • Consider renting to people who receive government assistance to pay for their housing. You will receive market rates with payment that is essentially guaranteed by the government. You have the right to select compatible tenants.

  • To list your living space, consider your local newspapers, such sites on the internet as offsite linkor Craigs List ( offsite link) or even engaging a real estate broker. In many parts of the country, the tenant pays the broker fee.

  • Standard form agreements for use in your state are available via the internet, or contact your lawyer. Once you have an agreement, you can duplicate it for each new tenant.

Rent your entire home and move into a smaller space. 

  • Your rental income might exceed the cost of your new residence.
  • To make things easier, have the renter be responsible for utilities directly.
  • Be sure to charge an amount that includes the cost of maintaining the residence.
  • To list your living space, consider your local newspapers, such sites on the internet as offsite link or Craigs List ( offsite link) or even engaging a real estate broker. In many parts of the country, the tenant pays the broker fee.


  • Before renting: check:
    • Your local law. Many local laws prohibit most or all short-term rentals under many circumstances. Enforcement can be sporadic and you may have difficulty finding out whether the local law is enforced - and what fine is likely compared to the amount that can be fined. If the law requires you to be licensed as an inn or bed-and-breakfast, consider applying for a license.  Ignorance of the law is not an excuse.
    • If you rent, check your lease. If you are in a condominimum or a coop, check to see whether it is okay. 
    • Your homeowners or renters insurance. 
  • It is wise to ask for a security deposit and references - and actually contact the references. Make notes of the person with whom you speak, the date, and what he or she tells you. Keep it in the file with information about the renter.

How To Set The Rental Amount

Check other rents in your area. You can learn about local rents through user generated web sites such as offsite linkand offsite link. You can also contact local real estate brokers. Be aware that if you speak with a broker, he or she is likely to pressure you to become a client - for a percentage of the rent.

Management Of The Property

If you're not up to it, you can ask a family member or friend to rent the property for you, and to manage it  to take care of maintenance and in case problems occur.

As an alternative, you can hire a property manager. Many firms charge as much as 100% of the first month's rent for finding a tenant, and 6 to 10% of each month's rent after that to take care of maintenance and to handle the money for you. You can find a property manager (by zip code or other criteria) through the National Association of Residential Property Managers, offsite link. Click on "Find A Property Manager."

Pitfalls To Watch For When Renting Your Residence

Renting your home could expose it to unwanted damage and wear and tear. 

There's also the risk that your tenant will not pay on time or even turn out to be dangerous.

You can help reduce risks by :

  • Asking for at least two references - and actually checking them.
  • Check a prospective tenant's credit ratings (with their permission).
  • Remove expensive items you don't want broken - or lock them in a closet to which the tenant doesn't have a key.
  • Require more than one month's deposit to cover breakage and other damage.

You can find a lease document at your local or online stationary store. You can also get a lease document with instructions and a breakdown of the landlord/tenant laws in your state from Leases & Rental Agreements from Nolo Press. Information about landlord and tenant rights and obligations is also contained at: offsite link. - click on "Property & Money."

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Homeowners Insurance

Taxes On Renting Your Residence

The net income you receive is taxable.

If you rent rooms or an apartment, you may be able to generate tax deductions for depreciation of your home and certain expenses and depreciation. 

Insurance If You Rent Your Residence

If you do rent part of your property, be sure to inform your Homeowners Insurance company of the arrangement to be sure you are covered for damage to your property, damage to the renter's property, and liability to the renter and his or her guests.

To Learn More

More Information

Homeowners Insurance

Turning Your Home Into An Assisted Living Facility

If you could need non-medical assistance at home, consider turning your residence into an assisted living home. You can enter into an arrangement with a local non-profit organization to which you give, rent or sell your premises.

The non-profit will help you become certified by the governmental authority (usually the state). The non-profit will also provide the assisted living services you need.

You can retain control about the services you will receive and who else lives with you. Rent or payment will be assured by the non-profit.

To learn about the licensing and other laws in your state, contact your State Health Department. To find the department, in your favorite search engine, type: Contact Information (name of state) Health Department.