Considerations for Short Term or Vacation Rentals
By: Rudman Winchell Attorney Daniel Burke
Anyone who has spent time here in Maine knows that our state has no shortage of wonderful locales that attract residents, and those-from-away, here to spend some time relaxing and recreating, no matter the season. If you own a second home or a vacation property in Maine, the idea of renting it out to visitors may have crossed your mind. Rent can help defray the cost of ownership, and on a larger scale, even encourage tourism. There are, however, considerations that any property owner should give thought to before entering the short-term vacation rental pool.
First, make sure you have a written rental agreement which will protect you and your property. There are many items to include in this document and you should make sure that it gets signed by all the parties involved. This document outlines the responsibilities of each party and will control if a dispute arises, bad behavior ensues or damage occurs to the property.
Second, some communities may restrict short-term rentals through zoning ordinances or other similar local regulation. This is generally intended to protect neighborhoods from potential problems generated by transient visitors, such as noise. It is important to check if there are any of these restrictions in place before entering into any short term rental agreements.
Third, taxes may be due. The rent you earn from renting the property is generally reportable income for tax purposes. Certain expenses, such as advertising costs, maintenance, utilities and insurance can be deducted. If you use the property as a personal residence for some of the year, these expenses must be divided between rental use and personal use. However, if you use the property as a personal residence and rent it for fewer than fifteen (15) days a year, rental income does not need to be reported.
If you are considering renting your property to short-term guests and have questions or concerns about protecting yourself and your property, you should seek the advice of a qualified real estate attorney.