Are you considering renting out your house or condo? Maybe you have a short-term job offer in another city and you’ll be living there for a few months. Alternatively, perhaps you plan to travel for an extended period of time. These or other situations might present the perfect opportunity to lease your primary residence and earn a little extra income.
In other blog posts, I covered renting a dwelling for a longer term or as an Airbnb. Here, we’re talking about a straight lease of your family home to a tenant for the length of time you’ll be away. In this scenario, there are a few things you need to think about.
Security of possessions
Even if you have a very minimalist lifestyle and don’t have many personal possessions in your home, you do want to make sure that what you have in the residence is secure. Chances are, you plan to rent your principal residence furnished. If there are certain pieces of furniture, such as antiques, that are very valuable, you might want to move them into storage for the time you’ll have tenants living at the home.
This goes as well for any memorabilia or other collectables that you’ve amassed. Be sure to move them elsewhere or lock them in a secure place on the property. While most personal records are stored electronically these days and you’ll likely be travelling with your laptop, take stock of any important paperwork you have and file it away in a secure location.
Rental contract
Draw up a clear lease agreement that complies with provincial regulations. Include the basics such as the amount of rent, when it’s due and how it’s to be paid, who covers the cost of utilities, what amenities are included like parking and how you and your tenant will communicate.
This is where you should spell out all responsibilities you have as the lessor and what your renter is expected to take care of. It could be that you’ve hired a property management company that will look after snow removal and grass cutting, for example. On the other hand, your tenant may be expected to do this work.
Home and appliance maintenance
It can be extremely inconvenient for renters when the landlord is in a distant city or on the move for vacation. Appliances break down sometimes and houses need to have regular maintenance. Plus, you may also have left equipment like a lawn mower or snow blower for your tenant to use.
When it comes to equipment that needs to be replaced or taking care of something like a plumbing emergency, take the time to discuss instructions with your renter ahead of time and ensure that they have the necessary phone numbers for tradespeople. Talk to your tenant, too, about how to handle minor repairs. If people can confidently fix a broken door knob or take care of a similar small job, you could suggest that you’ll offer a little rent relief in return.
Tax implications
Take note that there may be tax implications when you lease your primary residence. Essentially, it depends on the length of time you’re living elsewhere. When you file your income tax return you must name one place as your principal residence. As long as you lived in the house for part of the year, you can still designate it as your principal residence.
You might also be able to claim a Capital Cost Allowance (CCA) that allows you to amortize any depreciation on your property. Regardless, stay organized with good records so that a tax filing specialist can advise and assist you.
Remember
I’m here to help if you’re looking to rent out your home or are seeking a referral to an accountant to sort out how to claim leasing income and related expenses.
