Homesharing has made it easy to turn your spare room, finished basement, or entire home into a potential source of income. While hosting out-of-town guests can be fun, it can quickly become a ton of effort and a huge expense.
Sure, you could save on the cost of maintaining a homeshare by cleaning it yourself or buying bulk shampoo for guests, but I’d like to focus on big ways you can save on operating expenses. This way, you can keep more of the income you earn, instead of just pumping it all back into your rental property.
Claim your tax deductions
The bad news is you need to pay taxes on the rental income you earn from your homeshare property. The good news is there are many tax deductions you’re eligible for, which will save you a lot of money.
If you don’t rent your home out too often, you may not need to pay taxes on your rental income at all. If, in the course of a year, you don’t rent the property for more than 14 days and use the home yourself for at least 14 days (of at least 10 percent of the days you rent it), you don’t pay income tax on your homeshare earnings.
If you host often enough to pay taxes, there are a number of deductible expenses, including:
- Property taxes
- Interest on a loan to buy or renovate the property
- Fees homesharing sites charge you
- Professional cleaning in between guests
- Utilities like electricity, gas, water, trash pickup, cable, and internet
I recommend enlisting the help of an accountant to help you identify and claim every deduction available to you as a homeshare host.
Establish a homeshare emergency fund
Your guests will never be as careful in your home as you would be, so it pays to prepare. Appliances or furniture will break, so stash a portion of your earnings in a separate savings account.
When you need to make a major repair (which are tax deductible, too, by the way), you’ll have the savings on hand.
Make sure you have the right insurance
Many homesharing sites offer insurance that protects your homeshare when it’s being rented. These coverages can protect you against liability claims up to $1 million. This will cover things like damage to the building itself, or medical expenses if a guest injures themselves during their stay.
However, it doesn’t cover damage or theft of your personal property within the home, which includes items like furniture and artwork. Many homeowners policies don’t cover homesharing, so you’ll want to look into additional insurance protection to make sure you’re covered. Some homeshare insurance polices will let you pay per use, so you only pay when your place is booked.
While most guest stays will be without incident, accidental or intentional damage can happen. It pays to be prepared.
Use smart gadgets and save
Make running your homeshare more efficient by investing in home technology you can control from your phone. Smart locks allow you to give guests access without taking the time to meet with them, and you can lock and unlock them remotely if needed.
Avoid wasting energy, especially when your rental is unoccupied. A programmable thermostat allows you set the temperature and keep your utility costs down.
Learn from others
Some people have made quite a bit of money from homesharing, so make sure you learn what you can from other people who have done something similar. There are plenty of blogs, ebooks, vlogs and more out there to help you make more money off your rental.
Disclaimer: This information is provided for informational purposes, may not be applicable to all situations, and is not intended to provided legal, tax, or financial advice. For specific advice about your unique circumstances, you may wish to consult a qualified professional.