What Philadelphians Need to Know if You Plan on Renting Your Home During the Pope’s Visit
Pope Francis will be coming to our fine city of Philadelphia this September 26th and 27th. It’s no surprise that as many as two million people are expected to head into the city during his visit, and as such, the need for housing is in high demand. This has spurred many Philadelphia residents to consider renting their homes to visitors, in turn, netting a very nice profit. Some Philadelphians have reportedly confirmed rentals for the week of the Pope’s visit for upwards of several thousand dollars. While this may seem like a great way to earn some quick cash, anyone considering renting out their home to papal visitors should first consider the income tax issues related to this type of short-term rental.
According to Federal income statues, you are expected to report all sources of income, including that from rental properties, in your total gross income. However, there is a Federal rule that applies to those who plan to rent their home during the Pope’s visit. The Federal Law states that if you rent your primary residence for less than 15 days, you are not required to report that income on your Federal tax return. Therefore, in the case of those Philadelphians who plan to rent their primary residence for the week of the Pope’s visit, you do not have to report any profit you receive. However, if the property you plan on renting is not your primary residence, but rather a secondary residence used solely as a rental property, you will have to include the rental income on your tax return.
Although Federal Laws offer exemptions for this special circumstance, Pennsylvania does not. In Pennsylvania, all temporary rental income will be subject to tax.
Additionally, there are several other concerns applicable to those in Pennsylvania relating to temporary rentals. These issues can include but are not limited to:
- being required to obtain a Housing Inspection License from the City’s Department of Licenses & Inspections
- creating an owner-friendly rental agreement that is signed by the tenant at the time of reservation
- coordinating payment of the security deposit and full rental amount in advance of the rental date
- specific considerations applying to tenants, rather than homeowners, who plan to sublet their home (be sure to review your lease to ensure such an arrangement is permitted)
- consider the potential liability issues associated with renting your property - be sure to talk to your insurance carrier prior to committing to any arrangements to ensure that you are covered, should any incidents arise with the temporary renters of your property.
- know who you are renting to – it’s not a bad idea to run a background check on potential tenant(s) to ensure you know who will be living in your home while you are gone
Although the Pope’s visit could be a great opportunity to make some quick cash, be sure to consider the tax implications of any rent received and make sure take the necessary steps to ensure you and your property are well protected.