"You would want to be able to get rent more like $5,000 a month to justify tying up money in a property that's worth now around $560,000."
"The sale of that property would be completely tax-free for you. So 100% of that money would go to your pocket."
"Converting the home to a rental means eventually you lose the tax-free shelter in the sale of the property."
Allison has significant home equity and faces a choice between selling her property or renting it out. Clark Howard advises selling, as the rental income of $2,800 per month does not justify the investment. The gross yield is about 6%, but net yields drop to 3-4% after expenses. Additionally, selling the property allows for a tax-free capital gains exclusion, which would not be available if the property is converted to a rental. This tax benefit is often underestimated by homeowners.
Read at 24/7 Wall St.
Unable to calculate read time
Collection
[
|
...
]