In the modern age, there are a lot of ways to generate some additional income for your pockets by utilizing things you already have at your disposal.
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Renting out your home or vacation space is a great way to drum up some supplemental cash and you can do the same thing with your car, which can get you $100 a month or more.
Here’s how you can do it and also some cautionary steps to take to make sure it’s done right.
Follow the Rules and Policies of Car Sharing Services
When it comes to car sharing, there really is only one option left: Turo, according to Guillermo Francisco Cornejo, the co-Founder and CEO at Riders Share. Cornejo noted you have to make sure you read the rules and policies very carefully, including what insurance plan you are selecting, deductibles and follow them.
“As a host, you want to follow the rules to a tee, for example taking pictures before and after each trip to document the state of the vehicle and keeping communications inside the platform,” Cornejo went on to explain. “This will protect you in the event something happens and the renter denies responsibility.”
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Keep Records for Tax Purposes
Like any side hustle, it can be great to get the money from your gig or part-time job, but if you are earning $100 a month or more renting your personal car out, be sure you keep track of everything for when it comes time to reconcile the books for taxes.
“Using a car as an income-producing asset can trigger adverse tax, registration and depreciation consequences,” shared Chad D. Cummings, chief executive officer at Cummings & Cummings Law, who went on to say that renting out a vehicle converts it into a business asset, subjecting it to Schedule C reporting, self-employment taxes and potential audit exposure.
“Owners must track mileage, rental days and depreciation recapture,” continued Cummings. “Depreciation deductions are limited under IRC § 280F ‘luxury auto’ rules, and using bonus depreciation accelerates tax on any gain upon sale.”
Assess the Cost-Benefit of Renting Out Your Car
Even if the car generates $100 a month, the long-term cost of mechanical wear, legal exposure and reputational risk will exceed any financial upside, according to Cummings, who highlighted that short-term rentals accelerate engine degradation, void manufacturer warranties and increase the likelihood of unpaid tolls, DUIs or criminal conduct involving the vehicle.
“Once a car is linked to a crash or felony, it may become uninsurable or seized as evidence,” Cummings explained, adding that frequently “the seemingly passive $100 income is illusory when risk-adjusted and after a six- or seven-figure lawsuit arrives.”
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This article originally appeared on GOBankingRates.com: Rent Out Your Car for $100 a Month — Here’s How
