proceedings, and may negate the benefits of renting out your property. Background checks and requiring references on potential tenants are advised. Another con is that if you expect to sell within a few months to a year or two, having tenants in the home can make the property more challenging to sell. For example, if you have informed your tenant that you plan to sell and they must relocate within two months, if they do not have options, they may drag their feet and make it as difficult as possible for you to prepare the home for sale. Whereas, if your home were empty, you could easily clean up and get the property ready for the potential buyers without having to work around your tenant’s schedule. Converting a residential property into a rental property may result in capital gains tax. If you lived in the house for at least two years, then rented it out for under three years, you can use the provision that allows you to exclude up to $500,000 of gains tax-free. If you plan to sell a home you’ve converted to a rental property, you should consult an accountant or tax expert.
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