If you own an investment property in San Diego, you may be wondering if it is better to sell or rent out the home, and you are also probably wondering about the 2013 real estate forecast. Most analysts predict a continued housing recovery for 2013. As we discuss the pros and cons of renting out a house and selling a house, remember that you should talk to your CPA or your tax attorney before you do anything with the property you own.
Renting: Benefits and Detriments
1.You still have a property that can appreciate. It might take a year, or even five to 10 years for that property to appreciate, but if you still own the home, you can probably capture some appreciation on it at some point.
2.Tax breaks might offset the income tax you will have to pay on the rent.
3.The rent you collect might cover your principal, interest, taxes and insurance. If the rent doesn’t cover all of it, you will certainly be able to cover a portion of it.
1.There is the risk of possible damage to the property while someone else is living in it.
2.You could be taxed on the entire profit once you do decide to sell your home that you had previously been renting out.
1.The sale of your home could mean a tax-free capital gain (remember to check with your CPA or tax attorney).
2.Selling the house might free up some equity to invest elsewhere. You can also use any cash from the sale to put into your principal residence.
3.Simplicity. You will not have to worry about the management of an additional rental property, and you can focus on your own home and other investments.
1.You might be priced out of the market if you want to buy again in San Diego. As prices continue to rise, you might find it difficult to buy again in the future.
2.There will be zero appreciation. You will not be able to make any further money off the property that you sell.
3.You might be selling in a bad market, which means you won’t get the price you might expect for the property.
These are the benefits and detriments to renting out a home in San Diego versus selling a home in San Diego. If you have any questions about this, or would like to discuss the topic further, please contact us at Cassidy and Associates.