How to successfully take on a renter
Editor’s note: This article has been newly updated.
Here are eight key tips to keep in mind when renting out a part of your home:
1. Room vs self-contained
In general, when you share the same living space, the regulations around renting are different than if you rent out your basement as a self-contained apartment, for example. It is important to consult your provincial rental authority to know the specific rules around each.
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2. Know your permits
Before you decide to renovate your home to make room for a tenant, check with your municipality to see if one or more permits are required. The rules can vary widely from town to town, so make sure you follow the right regulations for where you live and what you want to do with the space. Not following the law can mean some heavy fines and can even lead to the removal of the rental space you worked so hard to set up.
Once you know the rules around renting a room in your home, next up is seeing if renting the space will affect your home insurance. Contact your insurance company and let them know you are taking in a renter. If something were to happen to your space and the insurance company wasn’t informed of a lodger or tenant living in your home, they may not cover the damages.
The rental income you get from a tenant renting in your home is taxable. You should claim the rental income you receive on your tax return each year. Before you file your taxes, be sure to know what percentage of your home is being rented out, as well as the percentage of time a renter uses shared spaces like the laundry room, bathroom, or kitchen. You can also look into claiming expenses specific to the rental unit, like purchasing a washer and dryer.
5. Rental price
Make sure you know the fair market value in your area and set the rent for your room or suite accordingly. Check Kijiji listings to give you a good idea of what spaces are renting for near you.
6. Know your rights
Know your rights and responsibilities as a landlord and make sure you protect yourself by having a written lease signed by the tenant. Check your local rental authority for all kinds of important information, including template rental contracts. In Ontario, for example, there is this resource. In Quebec: here. And in BC: here.
7. Know your tenant
Anytime you invite someone into your home, whether it is a babysitter, a contractor, or a tenant, there are common sense precautions to take. Of course, always meet them in person, ask for ID, speak to previous landlords, do a credit and criminal check, and follow the rules of your province.
8. Set the rules
Lay down some ground rules, especially when you are renting out a room and shared space is involved, such as a kitchen, laundry room, and common area. It is smart to put the house rules in writing so everything is clear. Smoking and pets are just two of the issues that you may want to address in the lease or the rules.
Once you have done the basic research required to take on a renter, sharing your home is a great way to save money on your mortgage and maybe even make a new friend, too. So take some great photos of your spiffy space to rent and post an ad on Kijiji today!