To rent or sell

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"Should I rent it out or sell?"

That's the first question I hear when clients upgrade to a new home or move. If they don't already own investment real estate, many are eager to get their first rental property under their belt.

Before you jump in, ask yourself:

Are you being honest about wanting to be a landlord?

Have you truly run the numbers to see if it makes financial sense?

And have you factored in the $500k capital gains exclusion?

When you move out of your primary residence, that exclusion clock starts ticking. You can exclude up to $500k in capital gains (married filing jointly) or $250k (single) from taxes when you sell, but only if you've lived there 2 of the last 5 years.

For those with significant gains who plan to sell eventually and have no long-term desire to be a landlord, selling while you qualify for the exclusion often makes sense.

For those with minimal gains, strong cash flow or appreciation potential, and a genuine interest in building a rental portfolio, keeping it can be the right move.

Don't let the excitement of becoming a "real estate investor" cloud your judgment. There's no universal right answer, but make sure you’re making the right decision for you.

Preserve Private Wealth is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specic securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to rst consult witha qualied nancial adviser and/or tax professional before implementing any strategy discussed herein.