Your first house can be compared to your first love. Remember when you fell in love? How excited were you? How much you swore that this would be to have and to hold? Well, this is the kind of excitement that owning a house comes with. It is a dream come true, an achievement you to take pride in. It is indeed like a lifetime treasure, a partnership that seems to last forever. However, times and circumstances are likely to come that may leave you with a hard time making a decision over whether to sell or to rent out your home. The good news though is that either way, you have a win-win scenario as you will be making money.
In making the decision, there are factors that you need to consider. This article brings to you seven questions you need to ask yourself before deciding if to sell or rent out your house.
- Why are you relocating?
You could be relocating because you have landed a new job. In such a case, think about how long the new job is likely to last. If it will last long, then you may sell the house and probably buy another one where you are headed. If you are going for a short time, then you better rent it out.
- Are you likely to want to come back?
Relocating is not only physical. It also requires mental preparation. In this regard, you should set up your mind that you have fully decided to move away from your house and no turning back. However, if you are not mentally detached, do not dispose of off your house yet. Rent it out instead.
- Have you cleared any debts related to the house?
Before deciding to sell your house, consider if there are any unpaid debts attached to it. Have you cleared the mortgage? Did you use the house as security for a loan? These are things you need to ask yourself especially if you want to sell the house.
- How do you want to earn money?
Renting will give you money in bits but over a long time. This means that you have some income for your retirement as well as a source of extra money even as you continue working. On the other hand, in case you need a lump sum, say to fund a project, then selling the house would be ideal.
- Which one earns you more money?
Though you may not be a business person, it is a great idea to have a profit mind in mind while considering if to sell or rent out your house. Look for whichever way that you will make more money, say in ten years. While renting may seem the obvious way to make more money, sometimes a client may just offer such a great price you just sell the house.
- Do you have what it takes to be a landlord?
Being a landlord is not as easy as getting that rental income at the end of every month, It is more than that. As a landlord, you may be required to deal with tenants who never pay rent on time while others may turn your house into a wreck. If you don’t have a heart to forcefully evict a tenant for not paying or can’ t stand the endless phone calls to keep up maintenance, then you may as well get a property manager or sell your house for your sanity’s sake.
- Any tax obligations?
Just like your 9-5 job, you will have a tax obligation if you decide to rent out your house. This is because it will become an income generating asset which will be taxed at the ordinary tax rate. However, you can have all the costs or expenses related to renting the house written off in addition to deductions of losses and depreciation. On the other hand, if you decide to sell the house you will have to pay up to 20% in capital gain tax depending on your tax bracket or not need to pay a dime if you are married.
Whether you decide to sell or rent out your house, it is good to involve a real estate company and financial advisor. The expert will offer the necessary advice not only on making this vital decision but also on how y6ou appropriately spend the money earned from either selling or renting.