Renting an apartment, condo, or house, leasing a piece of equipment, renting business property, or leasing a car all involve the common practice of renting something that is owned by someone else. This experience can easily become a nightmare with a bad landlord or lack of understanding of your obligations.
Here are some hints to become a smarter renter.
Read all agreements. Read the lease agreement thoroughly prior to signing. Ask for clarification of anything you do not understand. Look for clauses in the agreement that might suggest this property owner has problems with its current tenants. If the agreement seems unfriendly, don’t sign it.
“Most likely when the lease agreement was originally drafted for the landlord they used a lawyer to create an agreement from scratch,” adds Manager Chris Cicalese, CPA. “Prior to signing the lease, you may want to seek legal advice to ensure the agreement is fair.”
Negotiate up front. Be ready to negotiate your lease terms up front. If anything is unclear in the lease, have it clarified and put in writing. Do not depend on word of mouth. Be very clear about security deposits, first and last month’s rents, and services included in the lease.
Follow the terms. Be the tenant who pays a little early, not the one who always pays late. That way if you ever need a little extra time to pay, you have established the necessary trust to do so.
Proactive disclosure. If you think you will need a temporary exception to part of the lease, try to include it in your upfront negotiations. If this is not possible, consider proactively disclosing the exception to your property owner. This will help build trust and a reputation as being a good tenant.
Keep the property clean. This is especially important if you have a pet. When landlords come into your home, you will build confidence if the place looks like you treat it as if you owned it. The same is true with rental equipment. Always return it cleaner than you received it.
Know the owner and neighbors. Building a relationship with the property owner and your neighbors helps. If your neighbor has a problem with you, wouldn’t you rather have them come to you than to your landlord? Establishing a good working relationship with a landlord will help you when you need help with a problem in your home or with the equipment you rent.
Have you thought about insurance and taxes? Associate partner Rich Middleton, CPA suggests that “renter’s insurance should most definitely be considered as it is commonly overlooked by tenants renting their personal residence.”
Rich adds that rent payments can be claimed on tax returns only if they are business related. In addition “New Jersey allows a property tax deduction for rent on principal residence in lieu of real estate taxes paid.”
Leave with a smile. This is especially true for home and vacation rentals. When you leave, have the property cleaned and hassle-free for the landlord. Request a reference from the landlord for future rentals.
Are you evaluating whether it makes the most sense to rent an apartment or buy a house? Consider speaking with your accountant or advisor so all factors are taken into consideration.
Rich points out that, “in situations where your ability to fund a purchase or a substantial deposit is limited or you expect short term use of the leased asset, it may make better financial sense to rent.”
“Your CPA can run a cash flow incorporating the impact of tax deductions on cash flow to determine if you have the ability to carry the cost of the asset.”
Contact us for tax planning guidance and more information →
The information contained in this newsletter is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance. For more information or for assistance with any of your tax or business concerns, contact our office at 856.667.4100.
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