Many homeowners choose to rent out their primary residence. Whether this occurs because of a work relocation or for other reasons, this scenario does happen frequently. If you are looking at this as an option, there are several things that you will need to consider.
Hire a Management Team
If you will be living in a different area, you will need to consider hiring a management team to maintain the property. A good management team will be able to handle repairs, mow the lawn, and make any other necessary maintenance on the property. They will be able to collect the rent for you and deal with any renter issues. They will even help you locate a renter for the home when it is vacant. Hiring a management team can make things a lot easier on you as a landlord.
Research the Market Rent
As a landlord, you will have to determine how much you want to charge for rent. If you charge too much, you will not be able to keep the home rented. If you charge too little, you will be losing a profit. Therefore, you need to do some research and determine what market rent in the area is. Look at similar homes that are being rented out and determine what they charge. This will help you come up with a good price to charge for rent.
Obtain Landlord Insurance
When you move out of your primary residence and start renting it, you will need to change the insurance policy that you have on the home. You will need to change from a homeowner's policy to a landlord policy. This could be more or less than you are currently paying depending on the insurance provider. A landlord policy will cover damage to the property as well as liability. You should also consider putting a clause in the lease that requires your tenants to get renter's insurance.
Ensure You Handle Your Taxes Correctly
Renting out your primary residence will change the way that you file taxes. You will still be able to deduct the interest on your mortgage. However, you will also be able to get several other deductions. For example, you can deduct insurance premiums, management fees and utilities that you pay. You can even deduct the amount of money that it costs you to advertise the property to fill a vacancy.
Something else that you will want to consider is the amount of time that you rent out the property. When you live in a house for two out of the previous five years, you will be able to keep all of the profit from the sale of your house. Any difference between what you get for the sale and the balance on the mortgage is yours to keep tax-free. Therefore, if you start renting the house, you need to keep this rule in mind.