Should I Sell My House or Rent it Out?
By Bron Realty Group
Renting your home can be a great way to make some passive income, however it’s good to understand the Pros and Cons before renting out your home.
If you can get extra income after mortgage payment and property taxes, then it’s a nice way to make passive income.
*Rental properties can be financially rewarding and have numerous tax benefits, including the ability to deduct insurance, the interest on your mortgage, and maintenance costs.
It’s a way to build wealth over time if you plan on keeping the home for a while and creating a rental portfolio.
Holding onto a property when the market is down (obviously not at the moment) COULD eventually produce a higher profit down the road.
*You can sell it as a 1031 exchange and buy another income property down the road.
The wear and tear on the property can cause the value of the home to decrease over time.
*When the time comes to sell, if you haven’t lived in your home for 2 of the last 5 years, you will lose the capital gains exemption (250K for a single person / 500K for a married couple).
If you don’t use a property management company, you will be the one getting calls in the middle of the night to fix a broken water boiler or plugged sink.
Your rental could potentially sit vacant and cost you money.
Unexpected maintenance issues could throw your profits into losses.
Getting your renters out when it’s time to sell can be tedious and work against you.
You should also contact your mortgage lender if you do decide to rent your home to discuss the situation. Some mortgage lenders will permit you to rent out your home with your existing rate and terms. However, some may charge a fee, make you wait a certain amount of time, or require you to refinance.
As you can see there are many considerations to think about when deciding if you want to rent out your home.
*Disclaimer: Consult with your CPA to go over any tax implications before doing so.