Should you sell your house or rent it out?
Thinking of renting out your current home?
Keeping your current home as a rental or selling it and using the equity towards your new home isn’t always black and white. Deciding to rent or sell is a choice you should make after weighing all the options.
In Colorado, the rental market continues to be strong. Home values continue to rise. Before making a decision though, ask yourself a few questions…
Will this property cash flow?
In other words, when this property is rented and all expenses are deducted (mortgage, taxes, insurance, utilities, management, vacancy, repairs, HOA, etc) will the property produce a profit or a loss?
Return on Investment
How much profit would you make if you sold the property today? If you would make little or nothing it may be advantageous to hold onto the property. But with extremely low inventory in Colorado, the return on your investment could be substantial.
Consider the Taxes
If you sell real estate and make a profit, you may have to pay capital gains tax on the sell. However, the IRS allows homeowners to exclude the sell of a primary residence if you’ve lived in the home at least two of the last 5 years. Of course, consulting with your CPA is always the best way to know how the taxes impact you personally.
Can you handle tenants?
Many people are simply not cut out for being a landlord. While some tenants are easy to manage, others can require significant time and patience to deal with. Management companies can be hired to take some of the stress off but additional fees should be considered.