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1. What are the mortgage and tax implications if a first time home buyer decides to rent out a condo for the near time (say for the next 2 years after the date of home purchase) instead of living in that condo?
2. What is the typical differential in terms of mortgage rates, insurance and taxes?
3. Also what is the tax implication at the time of selling the unit for a profit or for a loss down the road?
4. What happens if you buy a condo, live there for say 6 months and then move out (after renting to someone)? What is the procedure to avoid any legal issues in this scenario?
This will be a very helpful information for me and many others. Thank you for the help.
most county/city property tax bills have a "homestead exemption". this is usually a tax break that is given to people that use the home as their primary residence.
If you are renting it out, you would need to remove the homestead exemption for the years that you don't live there.
Get homeowner insurance that is setup for renters living there. If you don't do this, and he home burns down, the insurance carrier is likely to refuse the claim because you lied to them and go insurance based on your living in the home.
Thank you all.
So based on your input if one removes the homestead exemption, get a landlord insurance (besides the existing home owners insurance) and the HOA is ok with renting out, one can go ahead. Of course, the mortgage company needs to be notified but as long as you make your payments on time, they shouldn't care either.
But what is the differential if one buys the property claiming that it will be rented out from the outset? Is the difference only in terms of increased interest rate and removal of homestead exemption clause? Or are there more challenges?
Thank you all.
So based on your input if one removes the homestead exemption, get a landlord insurance (besides the existing home owners insurance) and the HOA is ok with renting out, one can go ahead. Of course, the mortgage company needs to be notified but as long as you make your payments on time, they shouldn't care either.
But what is the differential if one buys the property claiming that it will be rented out from the outset? Is the difference only in terms of increased interest rate and removal of homestead exemption clause? Or are there more challenges?
Thanks again for your time!
If buying investment property, you can expect to put down 25% to get the best rate.
The reason is that the lender knows you are more likely to walk away from a 2nd home or investment property, since it is not your primary shelter.
2nd homes and investment properties just foreclose at a higher rate.
Thank you all.
So based on your input if one removes the homestead exemption, get a landlord insurance (besides the existing home owners insurance) and the HOA is ok with renting out, one can go ahead. Of course, the mortgage company needs to be notified but as long as you make your payments on time, they shouldn't care either.
But what is the differential if one buys the property claiming that it will be rented out from the outset? Is the difference only in terms of increased interest rate and removal of homestead exemption clause? Or are there more challenges?
Thanks again for your time!
you want landlord insurance and not homeowners insurance which is for owner occupied.
you can be responsible for things your tenant does under homeowners or in fact not be able to claim things if a tenant does them like arson,theft, or if you are vandalized .
under homeowners any household member is covered under your policy and is an insured so you need landlord insurance which cuts those ties.
a tenant stealing something is an insurance job under homeowners believe it or not.
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