Q. I’m planning on moving my residency to another state. I’m not sure if I want to keep my place here and rent it out for income. What are the positives and negatives?
A. First of all, congratulations on your move. There are a number of considerations here. On the positive side, if your expenses are reasonable and you can get a good rent, you will realize income from it.
On the other side, you will probably need to hire a property manager. This can run 6 to 10 percent of the rental amount. Additionally, you will be responsible for repairs and upkeep, periodic painting and insurance premiums, among other expenses.
Some other considerations: If you change your mind and decide to sell at some point, you will have to pay a non-resident tax on the sale of the property. This is almost 9 percent of the adjusted sale price.
Also, if the sale of your property would result in a capital gain, you would lose the one-time tax credit afford to sellers of their primary residence. For a single person owner, that would be $250,000 and for a couple $500,000.
You should discuss this with your accountant as there may be other ways to structure it if you decide to retain your home.
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