Do you own a property in Santa Fe that you're not currently living in? If you want to make money instead of letting it sit around and gather dust, your best option is to turn it into a vacation rental.
Vacation rentals are great for attracting short-term tenants who will only stay for a few weeks before returning to their personal lives. You often don't have to worry about them renovating your property or changing the space too much. However, legal restrictions may apply to you and your investment.
Here are some legal considerations for vacation rentals and what you should know.
Understand Your Property Restrictions
The first thing you'll want to figure out is whether there are any restrictions on your property regarding renting it out. This involves ensuring that your deed or lease agreement allows this use. There may also be zoning restrictions that keep you from doing short-term rentals.
Once you know your limitations, you can prepare your home for renters. This includes removing any personal items and listing the property online.
Buy Insurance That Actually Covers You
Homeowners hoping to rent out their properties will want good insurance. Unfortunately, standard homeowners insurance likely won't cover short-term rentals.
In this case, you'll want to find something like personal liability insurance and a vacation rental policy. Keep in mind that the vacation rental policy may be more expensive than homeowners insurance.
Tax Considerations
Something to keep in mind is that income generated from vacation rentals is taxable. You can't see it as free money, and how much you need to pay will depend on the location.
These taxes include sales tax, occupancy tax, and tourist tax. Speak with a tax professional to understand what you'll need to cover in your taxes at the end of the year.
Legal Restrictions on Short-Term Rentals
There may also be legal restrictions regarding short-term rentals in your city and state. You'll most likely need to get some kind of license to rent out your property. This may involve a property inspection to prove that you meet safety regulations.
Hiring a short-term rental property manager can help you stay on top of these legal obligations.
Draw Up a Rental Agreement
Last, but not least, you'll want an explicit, detailed rental agreement that outlines details such as cancellation policies, house rules, and other specifics. The idea is to protect yourself and keep guests from mishandling your property.
You should have a legal professional review your rental agreement to ensure that your investment is properly protected.
Know These Legal Considerations for Vacation Rentals
As a property owner, keeping track of each and every one of these legal considerations for vacation rentals is vitally important. Policies and regulations are constantly changing; what applies now may not apply next year.
PMI Santa Fe can help with all your property management needs, including marketing and accounting. We're part of a nearly 20-year-old franchise, and we bring much of that experience.
Contact us today to learn more and discuss your options.
