payments, or don’t pay rent at all. This will cause additional expenses for repairs, perhaps involve legal fees for eviction proceeding, and may eliminate the benefits of renting out your property. Background checks and requiring references on potential tenants is advised. Another con if you are expecting to sell within a few months to a year or two is that having tenants in the home can make the home more difficult to sell. For example, say you have let your tenant know that you are planning to sell, and that they must relocate within two months’ time. If they do not have options, they may drag their feet and make it as difficult as possible for you to prepare the home to sell. 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 residential to rental property may involve capital gains tax. If you lived in the house for at least two years, then rented it out for under three years, you might be able to 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 rental property, you should consult an accountant or tax expert.
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