Can I rent from myself?

[Adam B.]

Can I rent from myself? I'm trying to get creative with financing a rental. If this isn't legal, I don't want to do it.

Here is my hypothetical situation:

• I buy a 4BR, single-family home in a college town near my job, with an FHA loan.
• I move in permanently and meet all of the requirements of the FHA loan.
• Myself and 3 college students sign a lease each year to rent the house.
• I rent from myself, and the 3 others rent from me too.
• All 4 of us split the utility and rent costs.
• This is in NJ, where it is illegal to rent by room without a state permit (NJAC § 5:27-1.6).
• Additionally, it is ILLEGAL to rent by ROOM in the township in this particular zone, but it is LEGAL to rent by HOUSE.
• I get the proper municipal landlord permit for the home.
• I do everything properly when I do my taxes.

Has anyone done something like this before? I'd like some input as I try to get more answers.