Should You Rent or Sell Your House?

Should You Rent or Sell Your House?

If you are a first-time landlord, you’re probably going to think about whether it is best to rent out your property or sell it. There are, of course, pros and cons to both options, and it will depend on what your situation is. This article will provide you with information about renting and selling your home, have a read, and weigh up your options so you can decide which decision is best for you. 

1.   Money, Will I Make a Profit?

If you’re considering renting your house, this is the question you want to be asking yourself. Take the time to think about where your home is, the value of it, monthly expenses, and tax. If you can put your home up for rent and earn a decent profit, then renting is a good option as you will make a good cash flow. This cash flow would be useful if you have recently moved and need more money to help pay off your new mortgage. If this isn’t the case, you will find yourself paying more money for owning two properties, and therefore, you would benefit from selling the house.

Another thing to think about is taxes.  Section 121 provides all the information you need regarding tax and property selling. It basically states that if you have lived in the house for more than 2 years, owned the house and waited at least 2 full years before using the $250,000/$500,000 tax benefit on another primary residence, then you won’t need to pay tax on up to $250,000 profit or $500,000 if you’re filing as a married couple. So think about if any of the above criteria apply to you.

2.   Do You Have the Time?

How busy is your life schedule? As a landlord, you will need to spare some time to look after your property and tenants, especially when things start to go wrong. There might be damage repairs, tenants break their contract, or there are complaints from neighbors. These are aspects of being a landlord, which you will need to consider and address when the time comes. Say you have a tenant not paying rent, do you have the time and money to take that tenant to court to receive your payment. If there is a leak in the roof or doors that need fixing, do you have the funds to hire professionals to come and fix the house? 

3.   Will You Ever Need the House Again?

Are you in a position right now where you can confidently tell yourself that you will never need the house again? The good thing about renting your home is that you can effectively move back in whenever you need to. Or, for example, you have children, would you want to hand your property down to them? Or, you could rent it to your offspring and their partner if that option applies to you. The good thing about renting your property is that you can choose whether you want to rent it long term or short term, meaning you can take the property back whenever you need to. If you sell it, well, this is a more permanent option, so you will need to think about whether you’re ready to say goodbye to your house.