Contact Us Today! (972) 712-1515

"The Blog"

Snowbirds: What You Need to Know about Renting Out Your Property

Posted by Darryl V. Pratt | Sep 20, 2020 | 0 Comments

Snowbirds: What You Need to Know about Renting Out Your Property

Retreating to a warmer climate for the winter sounds like an ideal way to spend a few months. To help make this dream a reality, some individuals choose to rent out their second homes when they are not in use. But before you list your second home for rent, there are a few things you should consider.

Benefits of renting out your property

One reason to rent out your second home is to help cover the expenses of owning that second home. In addition, you will not have to fully close it up when you leave because someone may be staying there soon after. Frequent use of the property may also help deter burglars who might otherwise think the property is abandoned. Enlist a property manager to respond to any renters' needs or check the property during periods of vacancy.

Check local zoning ordinances and deed restrictions

Some communities may prohibit renting out a property. If you are purchasing a second home or have already purchased one, it is important to review your deed and contact the appropriate authorities or homeowner's association to make sure that you are allowed to rent out your property. If not, you could end up angering your neighbors and becoming involved in a costly lawsuit.

Make sure you are insured

Before you open your second home to renters, check your homeowner's insurance policy to see if it covers rental of the property. You may have to purchase a new policy or add a rider to your existing policy to provide sufficient insurance coverage, but the additional expense will be well worth the investment. The insurance will act as your first line of payment if a renter is injured on your property or the property sustains damage while being rented.

Determine liability exposure

Because many different renters may stay at your second home, there is an increased risk of lawsuits arising in connection with this type of use. Transferring ownership to a limited liability company (LLC) can be a worthwhile option for creating greater protection from a potential lawsuit. If a renter gets injured on the property, sues the LLC that owns it, and obtains a judgment that exceeds any property insurance limits you have, the renter can only go after the assets owned by the LLC to satisfy any claims, not your personal assets or those of any other owners of the LLC.

However, in some states, a single-member LLC (an LLC in which you are the only member) does not provide enhanced protection from your personal creditors. The reason is that your creditors should be able to seek relief through your LLC to satisfy their claims because there are no other members that will be negatively impacted by the seizure of money and property owned by the LLC.

Before transferring your second home to an LLC, it is important to speak with the holder of any mortgage on the property. In many cases, the transfer of a mortgaged second home to an LLC can cause the due-on-sale clause to be triggered, requiring repayment of the loan in full. Unless you are financially prepared to pay off the mortgage, this may be a substantial and unwelcome financial hardship.

Consider the tax implications of renting out your second home

According to the Internal Revenue Service, if you rent your second home for fifteen days or more a year, the rental income must be reported. In most cases, you will be able to deduct the rental expenses that you have incurred. Because you are using the second home for both rental and personal purposes, you will have to divide your expenses between the rental use and the personal use based on the number of days used for each purpose. Work closely with your tax advisor or Preparer to ensure that you accurately report your rental income and expenses and take the appropriate deductions on the right forms. Your tax Preparer or advisor can also provide you with tips on proper record keeping.

Get your second home ready for occupants

Before your first renter arrives, it is important to go through and remove anything personal that you do not want used, broken, or taken. This may make the space feel a little sterile, but the last thing you want is for a family heirloom to be stolen. You will also want to hire a cleaning crew to come in before and after each group. Not only will this keep the furnishings in good condition, but it may also encourage people to rent with you again. If possible, take pictures prior to new renters arriving in case damage occurs. Doing so will provide proof of the property's condition before they arrive to compare with the condition after they leave.

We are here to help

While owning a second home can be expensive, it can offer a lifetime of memories for you and your loved ones. We are here to assist you to make sure your second home is properly included in your estate plan and protected for years to come. Give us a call today so we can discuss ways to maximize and protect your second home. We are available for in-person and virtual meetings.


You have invested a lot of time in making your business a success, and it is difficult to think about relinquishing ownership or control of it. Nevertheless, planning is critical in creating a lasting legacy for your family. We can help you put a plan in place that helps you successfully pass your business on to the next generation and ensures that you have a financially secure retirement. Contact our office today at (972) 712-1515 to set up a meeting to discuss this timely topic.

About the Author

Darryl V. Pratt

With almost twenty-five (25) of experience as a dual-licensed Attorney and Certified Public Accountant, Darryl V. Pratt has practiced law in all areas of corporate and business law, non-profit law, estate planning, probate, guardianship, asset protection planning, bankruptcy (Chapters 7, 13 and 11), real estate, and taxation.


There are no comments for this post. Be the first and Add your Comment below.

Leave a Comment

DISCLAIMER Pratt Law Group, PLLC (PLG) has prepared the material on this web site, for informational purposes only; it does not constitute legal advice. Further, the material on this site does not create, and receipt does not constitute an attorney-client relationship. The information here is not intended to substitute for obtaining legal advice from an attorney. No person should act or rely on any information in this site without seeking the advice of an attorney. Members of the law firm of PLG are licensed to practice in various courts and jurisdictions; attorneys are specifically licensed to practice in state courts that are enumerated on their individual attorney profiles. We also have affiliations in particular cases with attorneys licensed in additional states. PLG does not offer any guarantee of case results. Although we are extremely proud of our excellent track record, past success does not guarantee success in any new or future case or client matter. This web site is considered advertising by the State Bar of Texas under the applicable law and ethical rules. The determination of the need for legal services and the choice of a lawyer are extremely important decisions and should not be based solely upon advertisements or self-proclaimed expertise. Only those attorneys who state they are Board Certified in their profiles on this website are Board Certified. All other attorneys are not Board Certified. Darryl V. Pratt is the attorney responsible for this site. The principal office of PLG is 2591 Dallas Parkway, Suite 505, Frisco, Texas 75034. Please note that the transmission of an e-mail inquiry itself does not create an attorney-client relationship. PLG cannot serve as your counsel in any matter unless you and our firm expressly agree in writing that we serve as your attorney. You should also be aware that the Statute of Limitations (the deadline imposed by law within which you may bring a lawsuit) may have expired or may severely limit the time remaining for you to file any potential claims you may have. Time is of the essence. If you believe you have a possible legal case, it is important that you seek out legal advice as soon as possible.