Tips for Valley residents renting out homes for Super BowlPosted: Updated:
With the Super Bowl, Pro Bowl, and Phoenix Open just around the corner, many Valley residents are renting space in their homes to eager fans who need a place to stay.
With rental prices ranging from $1,000 a day to $5,000 a day, renting out extra space is a great way to make some extra cash. Guests typically stay anywhere from three to ten days, and the best news is that the income from the rental agreement is typically tax free.
According to Internal Revenue Code Rules, you are able to rent out your personal residence for up to 14 days a year and not have to report the earned income. Usually in property renting, homeowners have to report the income on Form 1040 Schedule E, and get to take a deduction for rental expenses.
Renting to strangers presents some risks, though. AZ Money Guy Robert Hockensmith has some tips, rules and cautions for residents to keep in mind while renting out their homes:
- Make sure you have excellent insurance on your property, as strangers will be renting your home.
- Make sure you do not keep many valuables in the home, as they could be destroyed or lost. Most insurance companies do not protect collectables or sentimental valuables.
- Make sure the renters have insurance in the event anything is destroyed, along with a good security deposit.
- Be sure you have a written agreement with the tenant to prove this is non-taxable income, if the IRS questions where the money came from. Keep a copy of the lease with your tax return, even though you are not reporting the money.
- Ensure the company you work with to find your guests is reputable, and has done this type of rental in the past. There are a number of companies with great success rates in renting out personal residences for national events.
- Some of the tax deductions you normally take on your tax return will not be deductible for the number of days that you rent the property out, like real estate taxes and mortgage interest, but the income far outweighs any expense deduction you might lose.