Renting Out Your Home
May 13, 2009 – 6:31 amWelcome back!
If you live in a very slow market and can’t make a sale but must make a move, don’t resign yourself to being house stuck. You can at least cover your mortgage costs by renting out the house temporarily. If you can find renters who are interested in buying when they have more savings, you may be able to work out a deal where you lease the house to the renters and give them the option of buying the home within a specific period –say, two years. To help sweeten the deal, you can agree to credit 10% or so of their rent payments toward the purchase price of the house. While this arrangement can be a lifesaver if you must relocate to a new area, it does have a few drawbacks. You will not only still own the home and be responsible for its upkeep, you’ll also become a landlord. Plus, you probably won’t be able to qualify for a mortgage to buy a home in your new town until you are able to sell this home and pay back the loan. So if you are renting out your home, chances are you’ll become a renter, too, temporarily.
If the renters ultimately decide not to buy the house, you can either extend your rental agreement with them or put the house back on the market. With luck, the local economy will have improved enough so that you can now find a buyer willing to pay a fair price for the home. But if the market is still sluggish, you may be able to take advantage of an IRS rule that will let you deduct the loss from the sale if you have rented out the property for the two years prior to the sale.
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One Response to “Renting Out Your Home”
Interesting post. Caught my attention because I was thinking about renting a room in my house. Didn’t think about the possibility of doing a rent-to-buy route. Not really for me, but interesting to think about.
By El Cheapo on May 14, 2009