SELL OR RENT

Renting could be good if you find the right tenants. But, how can you do that? Renting a home is always a risk that you take. If you are willing to take the risk go ahead. Also, as a landlord you will be responsible for any major repairs that will need to be fixed during the lease. If I were you I would ask for a realtor to provide a professional market analysis on your home and right now is a buyers market so you should take advantage of that to buy your new house. Cash buys you more options. Good luck!

Of course, in most cases, moving means selling one's home — after all, it's usually a necessary step in affording a new home. But for various reasons some people choose to rent out their homes instead. In some instances, people know that they'll be leaving only for a year or two — perhaps while they pursue a graduate degree or take on a specific project at work. Sometimes the would-be seller simply can't sell at a price deemed acceptable, so he or she chooses to hang on until the market picks up. A more likely scenario these days, however, is that the owner wants to hang on while property values continue to soar. Others just want to keep their old home until they're confident they won't be coming back.

The Tax Issues When You Sell
As you probably know, Uncle Sam provides a generous tax break for those who've lived in their home for at least two of the past five years. Married couples who file jointly can earn up to $500,000 in capital gains tax-free, while singles can enjoy $250,000 in tax-free gains.

Good news: Those who are planning on renting out their home for just a year or two will still be eligible for these breaks (provided they've lived in their home for at least two of the past five years). Should they sell more than three years later, however, they forego the tax exemption, meaning their gain would be taxed as a capital gain. (Thanks to the Bush tax cut, long-term capital gains are now taxed at a maximum rate of 15%.)

Consequently, for those whose renting plans would turn a tax-free gain into a taxable one, the general advice is to sell.

The Tax Issues When You Rent Out
Becoming a landlord also offers some handsome tax perks. While rental income is taxed as ordinary income, your tax bill could easily be eliminated thanks to the numerous deductions on expenses and depreciation.

To sell or not to sell is a loaded question. Robin covered the tax aspects, and may be the need for cash for down payment on your home at Utah. You may like to get the assistance of a seasoned Realtor in your area to provide you with:
* Statistics about the different cycles of real estate in your area. Has the appreciation been substantial over the years or not.
* Are you going to get decent price in this Buyer's market or not?
After discussing this feed back and data, you can decide if you can have better return and keep your home, or sell it and look for other investment vehicles.
* You did not mention your long term plans. Are you going to be returning back and needing a home? do you have children that may be interested in buying that home in the future?
* In the event of renting your home, what is the capitalization rate, or return on your money, since you have all your equity there without any tax shelter?
* Do you have cash for down payment on your new purchase or not?

All this, in addition to what Robin mentioned may help you make a decision.

Kay Osman R, ABR, CRB, CRS, GRI, SRES (808) 523-6421
dosman888@aol.com