George Campolo Answers: Should You Sell Your Old House or Rent It Out?
Originally published on hometalk.com
If you are a current property owner, it’s possible you will eventually want to look elsewhere for another home. If you do decide to move to a new house — whether it’s because of space concerns, the desire to move to a new neighborhood, or a variety of other reasons — you may be wondering what to do with your old property. Should you put it on the market and sell it, or just rent it out? Before you decide, George Campolo, Associate Real Estate Broker with RE/MAX Distinguished Homes and Properties shares a few things you’ll need to carefully consider.
Eventual Selling Price
If you do eventually want to sell, timing will be everything. For homes in an area where prices are rapidly rising, it might be worth holding on to your house for another year or two to enjoy an even larger selling price in the end. In the meantime, you can choose to rent it out to bring in some steady rental income. However, you should still be careful of holding the property for too long; you don’t want to get stuck if the market drops.
Rental Income Accounting
Similar to a salary, wages, or dividends, rental income is subject to income tax at your usual tax rate; however, regulations will vary slightly from place to place. The benefit is that you can write off all the costs associated with renting the house, which can reduce your overall tax liability for a given year. Along with expenses, you can also claim depreciation and other costs. For a more comprehensive explanation, ask a certified public accountant, who can advise you on how to best structure your rental income and minimize your tax obligations.
When deciding whether to rent out your old home or not, it is important to remember that once you become a landlord, you will be liable for expenses such as maintenance, insurance, legal, accounting, and other fees. If you decide to hire a property manager, you will also have to factor in an agency cost. There are additional risks associated with rentals, including missed payments and reduced rental income if the market takes a turn for the worse.
Long-Distance Management Difficulties
If you are moving away from your current area and wish to be a long distance landlord, you will have to consider the additional costs of travel and management. If you prefer, this can be mitigated by hiring a property management company. If you wish to avoid this scenario entirely, selling your home might be the best choice for you.
Deciding whether to sell or rent out your old home is a complex and personal decision. However, by taking all of the variables into consideration, you can make the best choice for you and your family.
About George Campolo
As an experienced real estate professional, Mr. George Campolo helps first-time homebuyers navigate the practical side of real estate, from connecting with the best mortgage lenders to finding the right home inspector. He listens to his clients and picks up on cues that can help them secure the right and best home for their needs and budgets, all while offering impactful insights into how they can maximize their investment and enjoy the home of their dreams.
Contact George at (914) 760–6858