Roomates in a single family zoned home

[Tim Sherer]

Hello all, new member to BiggerPockets and newer member of the real estate game. I recently bought a home in a fairly popular area of the city. The house is zoned as single family so to my understanding I can't legally rent out rooms to roommates? Yet the city allows me to have up to 3 people not related to live in the home. If I had 2 friends move into my extra bedrooms and split the cost of living with no lease would this be possible? Also, what would be required for tax reporting on this money?

[Jason Commerford]

@Tim Sherer

Congratulations on buying your new home and looking to make the most out of your home purchase. I am not familiar with your specific city (or HOA if you have one), but the fact that a home is zoned for single family homes does not prevent you from being able to rent it out or rent out individual bedrooms. I also recommend that if you do end up renting by the bedroom, that you setup a lease with the individuals renting a room because it will help lay out the expectations of what the rental will look like (i.e. ground rules for the home and cost allocations among tenants).

In regards to the income, if you are collecting rent then that must be reported on your taxes for that year. Note you can offset some of this rental income by allocating costs incurred for the property to the percentage of the property you are renting. 

Hope this helps!