Is there anything special you need to do with the rent money when renting a home?

The rent will be counted as income that you need to declare on your taxes.

Any expense for mortgage, maintenance, etc will be counted as a deduction.

You must hold the security deposit separate from your own funds, and, in some states, you must pay the tenant interest.

I recommend opening a checking/savings account for the purpose of the rental and get a debit card. Put a little bit of start up money in the accounts. Put the security deposit in the savings, and never touch it. Put rent in the checkings account, and pay all your expenses out of that account using the rental income. This will keep the funds organized for you.

It will count as additional income. You'll need to keep track of the payments made - however, anything you spend to maintain and upgrade the home can be used as a deduction (business expense), so keep those receipts, too. (Pay by check, so you'll have another way to track the expenditures.)

Keep track of taxes, utilities, everything that your friend isn't paying for - those will help to decrease the amount you're liable for when tax-time rolls around again.

It is income of course, you will have expenses... repairs and maintenance, which you can use as deductions at tax time. As for the act of being a landlord, educate yourself on local rental laws.. rights and responsabilities of landlords AND tenants.