To put your house up for rent legally, you need to confirm the property meets your local housing code, clear the move with your mortgage lender, insurer, and HOA, give any federally required disclosures, write a lease that follows your state’s rules, screen applicants without running afoul of fair housing or credit reporting law, and document the home’s condition before you hand over keys. Most of the work happens before the listing goes live. Skipping steps is where new landlords get hurt, because the penalties for the paperwork failures are often larger than any single month’s rent.
Get the Property Legal to Rent
Your local building or housing department sets the baseline. Many jurisdictions require a rental license or certificate of occupancy before a tenant can move in, and inspectors verify structural soundness, working plumbing, safe wiring, and adequate heat. Renting without the required certificate can trigger fines from a few hundred to several thousand dollars depending on the city.
Smoke detectors go in every bedroom and on every level of the home, including the basement. Homes built after the late 1980s or early 1990s generally need hard-wired, interconnected units rather than battery-only alarms. Carbon monoxide detectors are required in most places for homes with gas appliances, a fireplace, or an attached garage.
The heating system has to maintain safe indoor temperatures while the home is occupied. Minimums vary locally, but federal standards for certain housing set the floor at 68°F and most local codes land in the same range.1eCFR. 20 CFR 654.409 – Heating If the furnace is old, service it and keep the paperwork. A heat failure in January is both a code violation and the fastest way to lose a good tenant.
Handle Your Mortgage, Insurance, and HOA First
Your mortgage probably contains an occupancy clause requiring you to live in the home for at least one year before converting it to a rental. Violating that clause can give your lender grounds to accelerate the loan and demand full repayment. Read your deed of trust before you list the property. If you are still inside the occupancy window, get written permission from the lender or ask about a loan modification.
A standard homeowners policy (usually an HO-3) is written for owner-occupied homes and generally will not cover claims that arise from rental activity. Your insurer can deny a major claim once they learn a tenant is in the home. You need a landlord policy, often called a DP-3, which covers the structure, your liability for tenant injuries, and lost rental income if the home becomes uninhabitable. Expect to pay roughly 20% to 25% more than your homeowners premium for comparable coverage.
An umbrella liability policy sits on top of the landlord policy and kicks in when its limits are exhausted. A $1 million umbrella typically runs $150 to $500 per year, which is cheap compared to one lawsuit.
If the property sits in a homeowner association, pull the bylaws before you spend a dollar on marketing. Many HOAs cap the number of rentals, set minimum lease terms, or ban leasing entirely. Violations can bring daily fines and legal action. Get the HOA’s approval in writing before you line up a tenant.
Required Federal Disclosures and Fair Housing Rules
If your home was built before 1978, federal law requires you to give every prospective tenant a disclosure form identifying any known lead-based paint hazards and the EPA pamphlet “Protect Your Family From Lead in Your Home” before they sign the lease.2Office of the Law Revision Counsel. 42 USC 4852d – Disclosure of Information Concerning Lead Upon Transfer of Residential Property The lease has to include a Lead Warning Statement, and the tenant has to sign an acknowledgment confirming they received the materials.3eCFR. 40 CFR Part 745 Subpart F – Disclosure of Known Lead-Based Paint Hazards Upon Sale or Lease of Residential Property The EPA’s inflation-adjusted maximum civil penalty was $22,263 per violation as of early 2025, applied per tenant and per lease.4eCFR. 40 CFR 19.4 – Statutory Civil Monetary Penalties The forms are free from the EPA and take about ten minutes to fill out.
The federal Fair Housing Act prohibits discrimination against tenants or applicants based on race, color, religion, sex (including gender identity and sexual orientation), national origin, familial status, or disability.5Office of the Law Revision Counsel. 42 USC 3604 – Discrimination in the Sale or Rental of Housing and Other Prohibited Practices It covers advertising, screening, lease terms, maintenance, and eviction. Phrases like “no children” or “perfect for young professionals” in a listing can be enough to generate a complaint. Many states and cities add protected classes beyond the federal list, so check with your local human rights agency.
Disability accommodations trip up more new landlords than anything else. You have to make reasonable accommodations in your rules when a tenant with a disability needs them for equal use of the home. The common example is assistance animals. Even if your lease says “no pets,” you have to allow a service animal or emotional support animal for a tenant with a qualifying disability. You cannot charge a pet deposit or fee for the animal, though you can hold the tenant responsible for damage it causes. You may request documentation when the disability or need for the animal is not obvious, but breed and weight restrictions do not apply to assistance animals.
Write a Lease That Holds Up
The lease governs almost every part of your relationship with the tenant. Name every adult who will live in the property as a party to the agreement. State the monthly rent, the due date, any grace period, and the late fee. States that cap late fees generally limit them to around 5% of the monthly rent, though many states have no statutory cap and simply require the fee to be reasonable and disclosed.
Security deposits are where new landlords most often slip. The maximum deposit ranges from one month’s rent to no limit at all, depending on the state. The lease needs to state the deposit amount, where the funds are held, and when the tenant can expect a refund after move-out. Many jurisdictions require landlords to hold deposits in a separate account and tell the tenant in writing where. Mishandling the deposit can force you to return double or triple the amount.
Spell out maintenance responsibilities. As the landlord, you are responsible for keeping major systems (plumbing, heating, electrical, and the roof) in working condition under the implied warranty of habitability.6Legal Information Institute. Implied Warranty of Habitability Tenants typically handle minor upkeep like light bulbs and basic yard care, but only if the lease assigns those duties. Silent lease, landlord’s bill.
Address entry into the property. Most states require at least 24 hours’ notice before non-emergency entry for inspections or repairs. A few require 48 hours, and some leave it to the lease or a reasonable-notice standard. Put the actual notice period in the lease.
Include a clause for personal property a tenant leaves behind. State laws vary, but most require written notice giving the former tenant a set period, often 7 to 10 days, to claim the belongings before you can dispose of them. Skipping that process can leave you on the hook for the value of the items.
State bar associations and local real estate boards often publish lease templates that comply with your jurisdiction’s requirements, and those are a reasonable starting point. A generic form drafted without your state’s mandatory disclosures and notice rules can contain unenforceable clauses that weaken the whole document.
Screen Tenants Without Breaking the Law
Listing on sites like Zillow, the MLS, or dedicated rental platforms gets the property in front of serious applicants. Clear photos and honest descriptions of the home, neighborhood, and utility costs filter out people who are not a fit.
The moment you run a background check or pull a credit report, you become a “user of consumer reports” under the Fair Credit Reporting Act and pick up specific legal obligations.7Federal Trade Commission. Using Consumer Reports: What Landlords Need to Know Get the applicant’s written consent before ordering any report. Application fees to cover screening typically run $30 to $75 per person. The reports show payment history, prior evictions, and criminal records.
If you deny an applicant based on anything in a consumer report, you have to send an adverse action notice. It must include the reporting agency’s name, address, and phone number, a statement that the agency did not make the decision, and notice of the applicant’s right to a free copy of the report within 60 days and to dispute inaccuracies.8Office of the Law Revision Counsel. 15 USC 1681m – Requirements on Users of Consumer Reports If a credit score factored in, the notice also has to include the score and the key factors that hurt it. Landlords miss this step constantly because they do not know it exists.
Apply the same screening criteria to every applicant. Write down your minimum requirements for income, credit score, and rental history before the first application comes in, and apply those thresholds uniformly. Inconsistent standards are exactly how fair housing complaints start.
Signing, Walkthrough, and Keys
At signing, both parties sign the lease and the tenant gets a complete copy. Collect the first month’s rent and the full security deposit in certified funds or by electronic transfer. Personal checks can bounce after you have already handed over possession. Confirm the funds have cleared before you give keys.
Walk the property together before the tenant moves in and document its condition on a written checklist. Note every scuff, stain, crack, and appliance issue. Both of you sign and date the checklist. That document is your baseline when the tenant moves out and you are deciding what counts as damage versus normal wear and tear. Without it, deducting from the security deposit becomes a fight you will probably lose.
Hand over all keys, garage openers, mailbox keys, and access codes during the walkthrough. Provide a written list of emergency contacts and instructions for reporting maintenance. Keep organized copies of the signed lease, the condition report, and every disclosure you provided. Those records are what protect you if a dispute surfaces months or years later.
Taxes You’ll Owe on Rental Income
Rental income gets reported on Schedule E of your federal return, where you list income and deductible expenses for each property.9Internal Revenue Service. Tips on Rental Real Estate Income, Deductions and Recordkeeping You can apply for a Federal Employer Identification Number to use on rental filings instead of your Social Security Number, which keeps your personal information separate from your landlord activity.
One of the largest deductions for a rental property owner is depreciation. The IRS lets you write off the cost of a residential rental building over 27.5 years, regardless of whether the property is actually losing value.10Internal Revenue Service. Publication 527 (2025), Residential Rental Property You depreciate only the building, not the land, so you have to allocate your purchase price between the two. Improvements you make before or during the rental period are depreciable on the same 27.5-year schedule.
If the rental runs at a loss after expenses and depreciation, the passive activity loss rules decide whether you can use the loss against other income. Landlords who actively participate in managing the property can deduct up to $25,000 in rental losses per year, with the allowance phasing out as modified adjusted gross income rises above $100,000 and disappearing entirely at $150,000.11Internal Revenue Service. Publication 925 (2025), Passive Activity and At-Risk Rules Disallowed losses carry forward to future years.