If you are lucky enough to own a piece of property that has a backhouse, cottage or granny flat on it then you may wish to rent that structure out for additional income. In fact, the opportunity to use that structure to help pay your mortgage or provide you with additional income may be one of the reasons why you bought the property in the first place. However, if you are thinking about becoming a landlord and renting out part of your property there are some important things to consider and to decide before you begin looking for a tenant.
The Landlord Tenant Agreement
Whenever you become a landlord, your landlord tenant agreement, or rental agreement, is always very important. It is especially important when you are going to be sharing the property with your tenant. In addition to the standard terms of a landlord tenant agreement such as the amount of the rent, when the rent is due and describing who is responsible for maintenance, repairs and insurance, an agreement to rent a backhouse should include information about:
· How common areas such as lawns and pools are going to be shared. Are you going to allow your tenant to access them at all or only at certain hours?
· The number of guests your tenant can have on your property at one time. Are you concerned about parties and how that will affect your ability to relax or work at home?
· How many tenants are going to occupy the rental space. You may be concerned about the safety of the tenants, the potential noise and the wear and tear on the structure.
· The presence of children and / or pets both of whom can damage your property and create unwanted noise.
The Tax and Legal Implications of Renting a Backhouse
There are always tax implications to being a landlord. However, if the tenant shares your property then your tax liabilities are a little more complicated than if you have a separate property to rent. It is important to keep track of the expenses for the part of the property that you use and the part of the property that you rent. Your tax deductions are dependent on you keeping careful records and taking proper deductions for the part of the property that you use personally and for the part of property that you rent to others.
Since you will be living in close proximity to your tenant, it is best to have a real estate attorney review your landlord tenant agreement before you provide it a tenant for his or her signature. A real estate attorney can also advise you concerning the tax implications of your arrangement. Then, you can be confident that the rental will provide you with income and that you are protecting your property interests.
If the rental of a backhouse, cottage or granny flat is done in the correct manner then it can provide real benefits to the property owner / landlord. Therefore, it is important to consider your options and create an agreement that will be beneficial to you now and in the future.
Speak to an Experienced Real Estate Attorney Today
This article is intended to be helpful and informative. But even common legal matters can become complex and stressful. A qualified real estate lawyer can address your particular legal needs, explain the law, and represent you in court. Take the first step now and contact a local real estate attorney to discuss your specific legal situation.