Reasons You Should Rent Out Your Home and Not Sell
If you are making the move from a home that you have purchased, you might be trying to decide whether to sell the home or to keep it as a rental property. While your initial reaction may be to sell, there are actually many good reasons to rent your home rather than putting it up for sale.
Benefit #1: Enjoy Passive Income
There will always be a demand for rentals, which means you will always be able to enjoy a passive income from your home if you choose to put it up from rent rather than selling it. Even better, you don’t even have to be bothered by the day-to-day operations of caring for your property or your tenants when you hire a property management company to handle your rental. All you do is enjoy the income the property provides.
Benefit #2: Tax Perks
Renting your home also offers a number of tax perks that you won’t get if you sell. Even if you only have one rental property, you are allowed to write off things such as mortgage interest and real estate taxes. You can also write off maintenance costs, insurance, utility costs, Homeowner’s Association fees and even travel costs associated with maintaining and renting your home. You are even allowed to deduct the depreciation of your property structure over a period of 27.5 years. In other words, if your property was worth $500,000 when it was built, you divide this number by 27.5 to get the $18,382 you can deduct as a depreciation expense. All of these tax breaks can significantly reduce your overall tax burden.
Benefit #3: Home Security
Holding on to your home as a rental property adds an extra layer of security to your housing situation. If troubles arise with your new property, you have your previous home to fall back on. The same is true if you move to your new property and find that the new location simply does not work for you. On the other hand, if you run into financial trouble and find that you need a large sum of money in a short period of time, you have the option to sell your rental property or to capitalize on the equity that you have built in that property rather than seeing your financial situation negatively affect your new home.
Benefit #4: Pay Off Your New Home with Your Old Home
Keeping your home and using it as a rental property can help you to more quickly pay off your new home. With the help of the monthly income that you earn from your rental property, you can make your mortgage payments on your new home. Once that mortgage is paid off, you can use the income from your rental property to apply toward other investments. This is a great way to let your dollars work for you. With rental demand on the rise everywhere around the country, you will surely have no problem finding a tenant for your property.