As a follow up to previous post “Getting Unstuck” about renting your home, let’s delve further into what you should know if you’re renting your home.
First, discuss the tax ramifications with your accountant or tax advisor. They’ll be able to help you figure out tax savings you can realize from investment property. If you’re keeping your primary residence now as an investment property, you have 3 years to sell without paying capital gains taxes on any profit.
Second, review the costs to sell your property post-tenant. Most homes need to be freshened (floors refinished, carpets replaced, painted) before being placed on the market for sale. Additionally, your home will probably show best vacant as you market it and may need to be staged with rental furniture. Plan 3 months of paying your mortgage, taxes, and if applicable, assessments, with no income. In most scenarios, the expense to sell after renting is $8-12,000.
Third, review these costs to sell vs. your long term plan. If you plan to hold the property as investment for less than 3 years, it may make more sense to sell now, take the loss and rip the band-aid off, and save money long term.
Of course, the whole point of these ‘getting unstuck’ scenarios & tips is to help you when you don’t have the money. So, coming soon…we’ll tackle ways to *find* the money and avoid this all together!