<prompt> Human: I bought my condo 3 years ago metro Detroit, Mi area. Its a 2 bedroom, 2 bath. I have recently started thinking about renting out the 2nd bedroom because I only use it for guests which are infrequent. I started thinking about this because a friend of mine that lives a few units down is moving out and asked if I would rent it out to her. How complicated would it be for my taxes and possible legal implications of this? Do I need to tell my condo association or can I just handle it as a friend living with me for a year or so? Any advice would be appreciated.  <response>: Ive found out that the proper term for your friend in most states would a be lodger, not a renter. Look up lodging laws in your state, and sample lodger agreements.I rent out both of my spare bedrooms in this manner. I did not tell my home owners association, as there was no requirement to do so although there was a phrase in my HOA documents requiring that the units be single-family homes which it defined. If you report this income as you are legally required to do, you will be taxed on it, but you can offset some of it with deductions. You are allowed to deduct practically all expenses associated with rental property, which in this case is a pro-rated portion of the expenses associated with your house utilities, depreciation, etc.You need to determine this in a logical manner and keep good records. One way would be to pro-rate your expenses based on the square footage of the rented out rooms, divided by the total square footage. For other things maybe heating cooling bill?, you may be able to justify pro-rating by the number of people e.g. 50, 1 renter, two people totalRegardless of your decision to report the income, I would still work up a simple lodger agreement for your friend. If shit ever hits the fan, the state will consider them a tenant, and will have many protections. You will not be able to simply kick them out or lock them out if they stop paying rent. A Lodger agreement can help you in these situations. 