Two of the most accessible income sources for US homeowners are renting out a spare room and renting out unused parking or storage space. Both use something you already own. Both also produce taxable rental income, and that is the part most articles skip over.
Renting out a spare room
Taking in a roommate or long-term lodger is usually the largest recurring income option available to a homeowner. What you can charge depends almost entirely on your local rental market, so look at comparable room listings in your area rather than a national average.
- Rent received is taxable rental income, generally reported on Schedule E of your federal return
- You can deduct the portion of expenses attributable to the rented space — a share of mortgage interest, property tax, insurance, utilities, repairs and depreciation. Keep records, and note that depreciation affects your basis when you eventually sell
- Check your homeowners insurance: renting a room can affect coverage, and your insurer may require a different policy
- Check your mortgage terms, your HOA rules and any local ordinance on occupancy or rooming houses — some cities regulate this
- If you rent rather than own, you almost certainly need your landlord's written permission
- Use a written agreement covering rent, deposit, notice period, utilities and house rules. Landlord-tenant law varies by state and often applies even to a room in your own home
- Screen carefully. Platforms such as Roomster, SpareRoom, Roomies and Facebook groups list rooms, and running a background or credit check with the applicant's consent is normal practice
Renting out a parking space or driveway
In places with genuine parking scarcity — dense downtowns, near stadiums, airports, hospitals, universities and transit stations — an unused driveway or garage space can generate steady income for almost no ongoing effort. Platforms such as SpotHero and Neighbor.com connect owners with drivers, and Neighbor.com also handles longer-term storage rentals for vehicles, boats and household goods.
- Income varies enormously by location: meaningful near high-demand venues, close to nothing in low-demand suburbs and rural areas. Look at what comparable spaces near you are actually listed at before assuming a figure
- Rental income is taxable and generally reported on Schedule E
- Check your HOA covenants, your lease if you rent, and local zoning — some municipalities restrict commercial use of residential driveways
- Check your insurance, and check what liability cover the platform provides for damage or injury
- Use a written agreement for any regular arrangement
Short-term rentals and Airbnb
Renting a room or whole property short term can generate more per night but requires active management and comes with more regulation. Many cities require registration or a permit, cap the number of nights per year, or restrict short-term rentals to owner-occupied properties, and many HOAs prohibit them outright. Local occupancy or transient lodging taxes usually apply. There is also a specific federal tax rule worth knowing: if you rent your home for fewer than 15 days in the year and use it as a residence, the rental income generally does not have to be reported at all — but you also cannot deduct rental expenses. Check irs.gov Publication 527 for the detail.
Check your legal position first
Before renting out any part of your home or driveway, check: your mortgage terms, your homeowners insurance, your HOA rules or condo bylaws, local zoning and short-term rental ordinances, and your lease and landlord permission if you rent. These checks take an afternoon and prevent expensive problems — an insurance claim denied because of an undisclosed rental arrangement is a far worse outcome than the income was worth.
How much can you earn from renting a parking space?
Income from parking varies dramatically by location, and that variation is bigger than any other factor. Spaces near a stadium, major transit station, hospital, university or dense downtown can command meaningful monthly rates; spaces in suburban areas with ample free street parking are close to unrentable. The only reliable way to estimate is to search SpotHero and Neighbor.com for spaces within a mile of your address and see what they are listed at and whether they appear to be booked.
Understanding the tax treatment
Residential rental income is normally reported on Schedule E, not Schedule C, which means it is not subject to self-employment tax in most ordinary rental situations. You can deduct the portion of costs attributable to the rented space, and depreciation is part of that — but depreciation reduces your basis in the property, which matters when you sell. If you provide substantial services to occupants, the activity can be treated as a business instead, with different tax consequences. This is an area where an hour with a CPA before you start is worth more than reading about it afterwards.
Keeping records from day one
Whatever you rent out, keep records from the first month: rent received and the date, the square footage or proportion of the property rented, receipts for repairs and improvements, and utility bills. Allocating costs between personal and rental use is straightforward if you track it as you go, and genuinely painful if you try to reconstruct it a year later. Good records are also what let you claim the deductions that make the income worth having.