If you’re choosing whether to sell or lease your prior home, it’s likely that you’re in a good position.
To be in this scenario, you have probably secured another home, and have the financial capability and stress tolerance to cope with becoming a landlord. Or perhaps you aim to rope in help from a property manager.
There is no solid answer for whether you should rent or sell your previous home. It depends on your personal circumstances, which means you have to size up the financial outcomes and implications.
The biggest drawcard with leasing is the potential to build personal family wealth through cash flow and equity.
There are some key factors that will help you to decide whether retaining the previous home is the right choice. Start by researching the rental potential in terms of both income and level of demand within your suburb.
It is important to consider whether the income you gain from leasing that property will cover the expenses. Determining whether the investment is likely to be positively or negatively geared will help you understand the potential impact on your financial position. Guidance from a financial professional is recommended.
To determine the potential value, you might choose an appraisal, a formal valuation, or to reach a conclusion from your own homework.
It is also important to consider the possible funds that the property could generate in current market conditions. If the sale price could generate a healthy profit, consider whether it would be advantageous to invest elsewhere. For those who have benefited from Sydney’s rising prices over the past five years, this could make for a hefty profit.
If you decide to hold on to the property and lease, it will mean taking a punt on the future price, an important consideration given that Sydney price growth is already slowing.
It is also likely to alter your financial position by affecting your tax position. Your home is exempt from capital gains tax until it starts to produce income, so it’s best to seek guidance from a tax adviser.
When leasing a previous family home, there is usually a level of emotional connection. It may have been your first taste of independence, where your first-born took their first steps, or you had thought it was your forever home.
Are you able to disconnect the emotion? Not all tenants are the dream. No one looks after your possessions better than you do.
Ultimately, it all depends upon how the figures stack up.
Article provided by www.domain.com.au