What are stipulations involved in turning property into rental?
I would like info on converting my mortgage from purchase to rental
property. Is there a “fee” to do this? What would be some pros and cons to doing it? I am trying to sell, and need to move soon.
Unless your mortgage has specific conditions regarding owner occupancy, there is no “conversion” required. However, your insurance coverage will need changing and, of course, there are tax implications.
There are mortgages that do not allow this but, most of the time, it’s not a problem.
You don’t even have to notify your lender to do this. The only thing you have to do is to notify your insurance company to change the coverage from a homeowners policy to a landlords policy, find yourself a tenant, and get an agreement signed.
There is some record keeping required too but that’s fairly simple. Just keep your receipts. The better your record keeping now, the easier it will be at tax time and the less likely you’ll overlook a deduction.
Renting your home out instead of selling is an excellent option in today’s market. If you plan to eventually sell, however, make sure you do so within the next 3 years because of the capital gains tax law (if you live in the home 2 out of the last 5 years you don’t have to pay capital gains tax).
The biggest issue in this decision is whether or not you’re cut out to be a landlord. For many people it is stressful, they get ripped off by teants, and they regret doing it. I’ve been a landlord for 30 years and it’s a good fit for me. Only you can answer that question.