Many homeowners, especially those who’re moving to a faraway place, face the dilemma of whether they should sell or lease the house. Both of these come with unique advantages that you need to assess before making a final decision.
Here, we’ve jotted down the benefits of selling and leasing a house to help you make the right decision.
Benefits of Leasing the House
You Have a New Asset
As you rent out the house, it becomes an asset rather than a liability. This means it’s possible to take out a second mortgage if the property is reclassified as an investment.
Once the house becomes an investment property, the mortgage lender no longer considers the house a debt but rather a generator of income and, thus, an asset. And you can use this asset to take out a second mortgage loan.
You Get a Second Stream of Income
If you can get a rental that’s enough to cover the mortgage payment and other homeowner expenses, such as taxes, insurance costs, repairs, etc., leasing the house is a prudent decision to get a new source of income.
You Get More Time
If you need to do repairs or renovations to sell the house at your ideal asking price but don’t have the money or time to do them immediately, leasing the house is a good option. The money you receive from the rental can be used for repairs and renovations.
Also, if you want to wait to sell the house at a higher price later, leasing it will create a continuous stream of income no matter how long you wait.
You May Get Some Tax Deductions
Rental property owners can write off several expenses on their taxes that let them have more money in their pockets. From insurance costs and interests to local and long-distance travels, home repairs, and more – there’re several items that are either fully or partially deductible from taxes.
Additionally, you may be able to enjoy capital gains tax exemption when selling the rental property. However, you should consult a financial advisor to understand the exact tax benefits you can get from leasing the house and selling it as a rental property.
Benefits of Selling the House
You Get Cash to Purchase a New Home
Many homeowners purchase a new house and sell the existing one at the same time to get the money required for the purchase. Unfortunately, it’s very difficult to take out a second mortgage loan unless you can make a sizeable down payment to the lender.
You Can Make a Good Profit
If you can sell the house to a reputable ‘we buy houses’ company, not only can you get a fair price but also close it within a short period of time. And if it’s a seller’s market, you may even get a better price than the market value of your house.
In addition to the above, leasing a house comes with many responsibilities that may or may not be possible for you to carry out comfortably. Now that you know the advantages of both options, it’s up to you to choose the right path based on your requirements and circumstances.