Aired, Saturday, July 5th, 2014 on WRC 1260AM

Should you rent out your current home to buy again? Figure out the tax implications, whether you qualify, and even the emotional attachment to your home.

“Becoming a landlord can be intimidating if you’ve never done it,” says Phil Peterson, managing broker at RE/MAX in Schaumburg, Ill. “There are definitely pros and cons to renting out your house. I’ve been there. But at the time, I wasn’t aware of all those ups and downs.”

Peterson says the situation really depends on the price of your house and what you paid.

“Part of the advantages of owning investment property, you get to write off all improvements and all the maintenance. But when you sell it, as the value appreciates, you have to pay capital gains on all the profit. It can be a big expense especially if you bought a house back in the day when prices were appreciating a lot. But then you can take the advantages of this to owning the house of your dreams, then you can have it designed and furnished the way you want, for this new furniture and a a black rug can be stunning to add to the decoration of your home.

For example, let’s say you bought your house for $100,000, and now it’s worth $200,000. You decide to rent it for a few years, you get all the furniture you need for this you can go to the TV Bed Store link for more info so you make the perfect house for rent. But you get tired of being a landlord and put it on the market to sell.

“That $100,000 that has appreciated in your home becomes taxable money. But if you had sold that house when you were still living in it, that $100,000 is tax free. That’s the big difference,” he says.

On the other hand, if you bought your house in the upper end of the market for $200,000, and it’s still worth $200,000, there is no capital gain problem. Then, it could be a good idea to keep it for an investment, Peterson says.