Many homeowners are looking for ways to bring in extra income. While renting out your basement apartment can be a good option, it is not always as easy as it looks. Read on to learn more.
Is it Legally an Apartment?
Just because your basement is finished, does not mean it is legally considered a ‘basement apartment’ that you can list and rent out. Were renovations already done before you bought the house? This could mean the work was done without a permit or that your municipality did not approve it as an apartment. Contact your municipality to start the process of registering your rental unit. They will conduct an inspection and let you know how to proceed.
Setting A Price
Do not set your rent too low. In Ontario, there are limits to how much a person can increase the rent from one year to the next. You want the rent to be fair to the client – but also to you. Talk to a real estate agent to discuss an appropriate number.
Keep in mind that you will also have to pay government tax on your rental income. It is taxed at the same rate as all other income. You will, however, be able to deduct some of your expenses. If you are renting your basement as an apartment solely for financial gain, make sure that the post-tax numbers work for you.