How to Rent Out That Spare Bedroom

• July 30th 2012

by Leigh Ann Renzulli

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Renting out an extra bedroom can be a smart financial decision. However, there’s more to the process than just putting an ad on Craigslist, and waiting for the offers to come in. UrbanTurf has put together a list of things that those who want to legally rent out a bedroom need to do before putting that ad on the internet.

Even Though It is Just a Bedroom, Have a Lease in Place

Those renting out a bedroom are not required by law to have a lease, but it is always safer to have a written contract. By having a written lease, one has proof of what they and the tenant have agreed upon.

It is also a good idea to walk through the bedroom with the tenant to see if anything needs fixing or replacing. The condition of the room before the tenant moves in should be included in the lease, so that the tenant cannot claim that damage done while they were living there existed when they moved in.

Register With the City

The District of Columbia considers renting out a spare bedroom a business, so interested parties will need to fill out Form FR-500 with the DC Office of Tax Revenue, which provides the city with the location and ownership of the business.

Interested parties will also need to apply for a Basic Business License with the Department of Consumer and Regulatory Affairs (DCRA). If renting out a bedroom, the applicant would choose “one family rental” as the primary business activity in the first pull-down menu on the online application. This application should be sent to or dropped off at the Business License Center at 1100 4th Street SW, 2nd Floor (map). The license is valid for two years, and can be renewed at dcra.dc.gov. Those failing to register their spare bedroom rental as a business could be fined up to $2,000.

Fill Out the Tax Forms

Those renting out a spare bedroom, will need to fill out tax form D-30 every April 15. The D-30 form is a declaration of rental income to the DC Office of Tax and Revenue (as opposed to DC individual taxes), and it can be found via the link above.

Register Property as Rent-Controlled (or Exempt From Rent-Control)

Under the Rental Housing Act of 1985, property owners are exempt from rent-control unless they own more than four rental properties. However, property owners that rent out a spare bedroom should file for the exemption with the city because if they are ever taken to court, the judge can rule against them given that not applying for that exemption means that you are not technically a landlord under the law. In order to avoid this, fill out a “Registration/Claim of Exemption” form. After registering for this exemption, the District of Columbia Department of Housing and Community Development will inspect the house or apartment to make sure that it is safe.

Warn Against Lead Paint

If a house or apartment was built prior to 1978, there could be lead in the paint. The Environmental Protection Agency and the Department of Housing and Urban Development partnered to create a pamphlet outlining steps people can take to protect their families from lead in their homes. Federal law requires landlords who are renting houses or apartments that were built before 1978 to provide this booklet to tenants. The pamphlet can be found on the EPA’s website.

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This article originally published at https://dc.urbanturf.com/articles/blog/how_to_rent_out_that_spare_bedroom/5833.