“We’re retiring and moving to Georgia to be near family. Do you think we should sell our University City home or rent it?”
Answer:
Let me start by saying I’ve advised many people NOT to sell their homes, depending on their situation. I say that because I obviously have a self-interest to just advise you to sell.
That being said…SELL IT!
Why? Three reasons:
#1- Under IRS Code 121, provided you’ve lived in your home for 2 of the past 5 years, you can sell it and exclude up to 500K from taxes. Once you’re out of the home over 3 years, that exclusion goes away (unless you move back in for another 2 years).
#2- It’s unlikely that renters will treat it with as much care as you have. You may be heartbroken to come back in a year and find it’s been run into the ground and abused.
#3- Expensive homes make TERRIBLE cash-flow investments. I’d expect you’d make all of a meager 2-3% on your equity. Sell the home and put your money elsewhere, whether it’s a 2-4 unit property (where you can get 4-8% on your money), bonds (which I know nothing about), or some other solid investment.
