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The answers to some of these questions can affect your insurance requirements. Next, check with your homeowners insurance company to see how your decision affects your home insurance. Some companies don’t have a problem with renting, while others may specifically prohibit you from renting out your extra room. They may simply have some restrictions—for example, no more than two tenants. Or you may have to get an entirely new policy. Why do they care? Well, hosting someone in your home increases both your liability and your risk of property damage. That means it’s more likely the insurance company will have to pay out for an incident on your property. Never try to rent out a room without telling your insurance company. Sit down with or call an agent and talk about whom you’ll rent to and for how long. Particularly, the length of their stay can affect your premiums. Here’s how. Short-Term RentersTenants who only stay with you for a few days or weeks may be considered visitors under your current homeowners policy. However, this isn’t the case for all policies, so you need to check with an agent to be sure. It’s also possible that the insurance company might require an endorsement or rider to your existing insurance policy to cover your tenant. Regular short-term rentals to many different guests, on the other hand, are usually considered business activities. If renting to lots of people is your plan, you probably need a business policy because the standard homeowners insurance policy doesn’t cover business activities conducted in your home. With so many different considerations, it’s crucial to notify your insurance company to make sure you have the right coverage. They need to know that you have a tenant, especially because your tenant could get hurt on your property or damage the premises. Not notifying the insurance company of tenancy in advance could give them a reason to deny your claim. Compare Home Insurance Quotes Instantly
Long-Term RentersPlanning on renting to the same person for months or a year at a time? You may need to get landlord insurance, which usually costs about 15–20 percent more than a homeowners policy, or to add room rentals to your existing policy. This is necessary because most standard home insurance policies don’t cover room rentals. You may decide to charge slightly higher rent to offset the cost of landlord insurance. 5 Tips for Renting Out Spare Rooms
You can fully deduct any expenses for the room your tenant is renting, like fixing a window or painting the walls. You can also deduct the extra premiums you might be paying because you’re renting out a room. But when it comes to expenses for the rest of the home, like trash removal, roof repairs, or fixing common areas that you and your tenant share, you have to divide those expenses. The easiest way to do this is by measuring the square footage of the space you’re renting and comparing it to the total square footage of your home. For example, if the room you’re renting covers 15 percent of your home’s square footage, then you can deduct 15 percent of your home improvement activities as rental expenses. Be sure to keep good records of all the work you do around your home to make sure you’re taking the deductions you’re entitled to. Frequently Asked Questions - Renting Out a Room
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