In most cases, moving means selling one's home. After all, it's usually a necessary step in affording a new home.

But for various reasons some people choose to rent out their homes instead. In some instances, people know that they'll be leaving only for a year or two perhaps while they pursue a graduate degree or take on a specific project at work. Sometimes the would-be seller simply can't sell at a price deemed acceptable, so he or she chooses to hang on until the market picks up. Or, if property values are rising, an owner may want to wait to be able to ask for a higher price later.

Real Estate Professionals  across the country are inundated with questions about the current real estate market from worried customers.

Fear of navigating the market's unprecedented conditions keeps many families from making any move at all. This inaction not only limits them from getting on to the next phase of their lives, but also causes them to miss out on opportunities to buy homes at historically low prices and interest rates.

Today's marketplace is filled with great values, the kind of values we haven't see in more than a decade.

The Case for Renting your Home

The Tax Issues When You Rent Out

Becoming a landlord also offers some handsome tax perks. While rental income is taxed as ordinary income, your tax bill could easily be eliminated thanks to the numerous deductions on expenses and depreciation.

Let's talk expenses first. You can deduct pretty much any out-of-pocket expenses related to owning and managing the property. This includes your mortgage interest payments and property taxes. It also includes other expenses, like advertising or broker fees, the costs of repairs to the property, maintenance expenses such as cleaning services, utilities and management company fees, the cost of fire and liability insurance, and even travel and local transportation expenses incurred for the maintenance of the property and collection of rent.

Then there's the "phantom deduction" called depreciation. Just divide the fair market value of the property at the time you start renting it out (excluding the cost of land) by its recovery period which is 27.5 years for residential rental property. Bingo! There's your annual depreciation. For example, if the home is worth $250,000, you divide that by 27.5 and get a $9,090 annual deduction. If you have another $5,000 in out-of-pocket expenses, which are also deductible, you can get $14,090 in rent tax-free.
 

The housing market can't stay so bleak for ever -- if selling is an option, you may be best to wait until the market recovers before selling your primary residence.

Should You Hire A Property Management Company? 

Being an absentee landlord is impossibly difficult unless you have someone to oversee the property. When you add up the responsibilities, there's much to be said for hiring a professional management company. If you decide to go this route, it will cost you about 10-percent of the monthly rent collected. Depending on your agreement, it could take care of everything related to the property — from putting it on the market and screening your tenants to collecting rent, maintaining the property and even taking care of your mortgage.

Renting vs. Selling 

The nation's painful housing bust has put sellers in a serious lurch. To get their properties sold, many sellers will have to make sharp reductions to their asking prices—a necessary evil that can rob the investment of its return. But homeowners can ride out the turbulent market by converting their homes into rental properties.

What are the benefits of renting out your home if you can't sell it? 

There are many benefits, including the ability to ride out the market and potentially not lose money on a home. It generally isn't in a homeowner's best interest to sell at the bottom of a market—unless they have an unusual financial circumstance, such as immediate retirement or illness. Secondly, renting offers the ability to take a tax deduction if there is any rental loss. Moreover, renters have the ability to move back into the home. In other words, if you're not sure that you will like Texas and want to move there, you can always move back to your Michigan home if you don't like it.
 
 

When would it make the most sense for a homeowner who is unable to sell his home to rent it out?
If you need to move quickly to take a job but don't want to sell your home in a down market, renting is a great alternative. If your home isn't worth what you owe, you might be able to modify the loan to change the principle balance and rent it out to ride out the market.

But isn't it possible the home would spend as much time languishing on the rental market as it did on the home sales market?
Not likely. Rental markets are generally strong; Harvard studies support it. In areas where there are a lot of foreclosures, those people need rentals units to live in. And in areas where the market is still strong, there are people who cannot get a loan to buy a home, so they need rental properties as well.