Can I Rent Out My Primary Residence?

Key takeaways:

• Yes, you can rent out your primary residence.
• Renting can provide income while holding onto an asset.
• Being a landlord involves responsibilities and risks.

The short answer is yes, you can rent out your primary residence. Whether you’re considering it for financial reasons, lifestyle changes, or another opportunity, renting out your home can be a viable option. However, it’s crucial to understand the ins and outs of renting out your primary residence. This isn’t a lightweight task. 

By the end of this Redfin article, you’ll be better equipped to know whether you should sell and search for a new home for sale in Seattle or if adding your home among other rentals in Bellevue is the way to go. Now, let’s get started. 

Pros of renting out your primary residence

Let’s start with the fun part. Renting your primary residence can offer several advantages, ranging from short to long-term. 

• • Additional income: It provides an additional stream of income. This can be particularly helpful in covering mortgage payments, property taxes, and other expenses.
  • Asset retention: It allows you to retain ownership of your property while not living in it, which can be valuable if you plan to return in the future.
  • Temporary relocation solution: For those relocating temporarily, renting can be more convenient than selling. You maintain your assets and have a place to come back to.
  • Tax benefits: Not all tax is bad tax. In fact, when it comes to renting out your primary residence, you may be able to take tax deductions on repairs, HOA fees, property taxes, and other property maintenance fees.

Cons of renting out your primary residence

While having multiple income sources is always welcome, it’s important to understand the drawbacks. Being a landlord comes with responsibilities and potential risks that shouldn’t be overlooked. When asking yourself, “Can I rent out my primary residence?” – you now know the answer is yes. But should you? Let these cons help you decide.

• Landlord responsibilities: You’ll need to manage tenants, handle maintenance and repairs, and deal with any issues that arise.
• Financial uncertainty: There’s the possibility of vacancies and the uncertainty of rental income.
• Property wear and tear: Your property may experience wear and tear.
• Tax implications: Renting out your primary residence doesn’t just mean tax benefits, it also means costly tax implications. This can be in the form of capital gains (if you didn’t live in the property for more than two years before eventually selling) or any other local laws and tax regulations. Taxes can also vary depending on your rental strategy (whether you’re creating a short-term rental, like an Airbnb, or a long-term rental).

Other factors to consider before renting out your primary residence

Before deciding to rent, check your local regulations and homeowner association rules. Some HOAs prevent homeowners from turning their properties into short-term rentals. Ensure you have the right insurance coverage for a rental property (coverage can differ from your standard homeowners insurance). 

It’s also crucial to decide how the property will be managed – whether you’ll do it yourself or hire a property manager. Think about setting up your home as a rental property effectively to attract tenants. Renting your home isn’t just about having four walls and a bedroom and bathroom. It’s also about the quality and how the home is marketed.

What to know about managing your rental property

Setting up your home as a rental property starts with property management, which involves several key areas. These include:

• Finding and screening tenants
• Collecting rent
• Handling maintenance and repairs
• Ensuring compliance with local laws. 

Clear communication with tenants is vital and you’ll need to establish protocols for dealing with emergencies. And of course, being organized, responsive, and professional is critical for successful property management.

Now, you’re ready to decide if renting out your primary residence is right for you:

Renting out your primary residence can be a beneficial move depending on your circumstances. By understanding the pros, cons, and management requirements, you can make an informed decision that aligns with your goals and financial situation.

Frequently asked questions: