Want To Rent Out Your Place During Lollapalooza? Don't Forget Taxes, Insurance
CHICAGO (CBS) -- If you're thinking about renting out your place downtown during Lollapalooza in a few weeks, there's a couple things to consider first.
Websites like Airbnb, Homeaway, and VRBO make putting your condo or home up for rent easy; but before you take the plunge as a temporary landlord, make sure you cover yourself.
"Instead of taking a couple hundred dollar damage deposit from the guest, you can buy insurance that, if there's any damages, it'll be covered," said Rob Stephens, general manager of Avalara MyLodge Tax, a tax management company. "The damage deposit is really becoming a little passé in our industry, just because of the mechanics of taking the money, holding it, and then you've got to refund it – either do that on a credit card, or a check."
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Stephens said you can't count on your homeowners insurance covering damage caused by renters.
"Most rank-and-file insurance policies are not going to cover damages under short-term rental, because that is considered a business activity," he said.
Instead, you might want to opt for damage insurance offered by sites such as Airbnb and VRBO.
Stephens' company takes care of another concern for temporary landlords: the hotel occupancy taxes clients must pay for such temporary rentals, which would otherwise require registering with city and state.
"In Chicago, it's a 16.4 percent tax, so it usually – especially in urban markets – is pretty high," he said. "In the case of Chicago, part of it is paid to the city each month, and part of it is paid to the state each month."
