Renting vs. Selling Your Home
Some home owners may consider renting out their property with the perception that they will receive a good income from doing so. There are pros and cons of renting, just like there are in selling a home.
One of those areas that a landlord may assume will offer a huge break is in paying taxes on rental properties. Renting your home does allow you to write off necessary repairs to the home but an owner can only take the full deduction if the repair does not significantly add value to the property. While you may like to add new, trendy lighting inside or outside the home so you can charge higher rent, that will not allow you to claim it as a “necessary repair.”
Necessary repairs include such things as replacing or repairing a leaky roof or replacing a faulty water heater, not property upgrades. Improvements can be written off; however, an improvement that adds value or prolongs the life of the property is not fully deductible in a single tax year. All Property Management explains that you divide the total value of the property by 27.5 years “to figure out the yearly deduction you can take.”
There are other deductions that a property owner can take, such as normal property upkeep, interest and advertising, but the pros and cons of renting should be weighed against those of selling the property. If you want to reap the benefits of a seller’s market and avoid potential headaches of tenants who may damage the property or having to file eviction or pay for upkeep of the property down the road, then selling your property may be the path to take.
Call 310-266-4650 to speak with a qualified real estate agent about your real estate needs.