Renting out rooms owner occupied, unrelated tenant laws

[Account Closed]

I have some very specific questions about possibly renting out rooms in my house. My partner and I bought a house 5 months ago and would like to earn some extra income to eventually rennovate the entire house. Scenario: Rent 2 bedrooms on main floor to 1-2 people (strangers) who would share a bathroom. Partner and I would live in basement with our own bathroom (non-conforming room). We would all share the kitchen/dining room/living room/W&D. We would probably add an extra fridge in the basement for overflow. We are 2.5 miles from downtown Denver, so good location.

1) How do we get around the no more than 2 unrelated tenants rule in Denver (single family home)? Does this still apply to owner occupied rentals? We are not married. We were thinking about renting to a married couple and getting an "extra person" permit so we would be within the tenant law. Or a couple with 1 car would bring less attention, but would like to stay within the law.

2) Would I find a real estate attorney or CPA to determine tax implications? (depreciation, which one of us reports the income [1 is 15% tax bracket; 1 is 28% as single filers], legality, what would the actual net income be, how much to charge)

3) Can we as owners legally live in a non-conforming room (no egress)? Would our insurance allow us to take this liability?

4) What are the insurance implications--could we legally add renters to our insurance?

Any advice or local suggestions would be appreciated.

[Drew Fein]

Thanks for the shout out, @Dan Mackin!

@Account Closed, I would be happy to discuss this with you.  Here's a first stab at some of your questions (but feel free to give me a call if you have further questions). 

1) Unfortunately, the occupancy limits do extend to owner occupied properties; therefore, you are already at the limit.  You could probably get a home occupation permit to allow for one additional person.  

2) I am not a tax attorney, so you should defer to @Linda Weygant or your tax professional to determine the tax implications. 

3) No and no. 

4) For insurance, you will probably want to insure as though the property was a rental property, i.e., a homeowner's policy, a landlord's policy, and have renter's insurance for each tenant. But you will want to talk with your insurance agent on how to get maximum coverage. 

I should also mention that we use a different, more complex lease for renting out by the bedroom, which is something to consider before you proceed.