The couple live in an area of Florida where houses have dropped in value since the peak in 2006, the same year their house was purchased. As they debated whether to sell their home in 2011, they realized that if they chose to sell, they would be forced to take a $50,000 cash loss, not including closing costs. They looked at the numbers and decided they could not afford to sell their home. For them, it made more sense to rent their home and purchase a second home. When you rent, you may take a loss monthly, but you do not have to come up with the cash to satisfy the loan immediately upon sale. If you sell at a loss, then there is no tax benefit. The couple bought some time for real estate prices to further recover. Beneficial tax deductions of renting a home. For homeowners in need of tax deductions, there are benefits to renting rather than selling a house. You can deduct expenses related to owning and managing your property when you rent it. This includes mortgage interest payments, insurance, property taxes, maintenance, fixtures, cleaning services and even travel and local transportation expenses incurred in maintaining and managing the property and rent collection.
PROS & CONS OF RENTING OUT
The biggest advantage of renting out your vacant home is gaining an additional source of income. This extra money each month will help you pay property taxes, mortgage, and utilities (unless you rent with the condition that tenants pay
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