Renting a primary home, insurance and other questions.

 I have a primary home that is situated in a quiet secluded wooded lot
with a built in pool. I'm away on travel at times and I have some close
associates wanted to rent it time to time as a "get away".  What are
the insurance and legal precautions for doing this?  

Thanks

 

it's now a business. your personal insurance probably won't cover it at all.
it has lots of tax implications too.

 
Charles Spitzer wrote:

at all.

The insurance won't be any more than a typical homeowners policy.

Since you are making it a rental property you will get the benefit of
using depreciation to help offset the income. Plus you can write off
any expenses incurred on the property such as utilities, taxes,
insurance, maintenance, interest, etc. Should show a loss if you aren't
renting it a full 12 months and that will actually reduce your tax
liability .

 "Since you are making it a rental property you will get the benefit of
using depreciation to help offset the income. Plus you can write off
any expenses incurred on the property such as utilities, taxes,
insurance, maintenance, interest, etc. Should show a loss if you aren't

renting it a full 12 months and that will actually reduce your tax
liability . "


As someone else said, you should make sure you understand the tax
consequences of what you are doing.  I'd suggest gettting advice from a
professional.  The above advice is very wrong and could prove very
costly.     For it to qualify as a rental property, you can only occupy
the home a certain period of time per year yourself.  So, the notion
that you can rent it occasionally as a get away, then just write off
all utilities, maintenenance, etc. is wrong.  As for interest and
taxes, they are already fully deductible.

The other critical issue is by converting it to a rental property, it
no longer qualifies for the 250/500K capital gains excusion you would
have on your personal residence.  That can easily cost you tens of
thousands of dollars in tax.  Talk to a tax pro and figure out the
options.

 Close associates can quickly turn into enemies once they accidentally
break something costly and either they refuse to pay or you have to
worry about asking them in the first place.  Don't do business with
friends.