Selling your home at a loss can be a bitter pill to swallow. However, there are a few ways you make the most of a bad situation. Before you decide what to do, take a look at a few situations you could consider before taking a loss on your property.
Turn it into a rental
Before putting your home on the market, consider turning it into a rental opportunity. It could benefit you financially, especially if you were to make a loss on the sale of it. You can rent it out to generate passive income. Before choosing this option, you will need to crunch the numbers to ensure it makes sense first. If the market allows you to charge high enough rent to cover the mortgage, taxes, insurance, funds for repairs, and a property management fee, – plus a little more – then renting out your house could be a smart investment.
Consider the tax benefits
Typically, you won’t see tax benefits from taking a loss on your property, unless you turn it into a rental property or if you used it for business purposes, such as a home office. If either of these situations apply, you’ll be able to deduct the loss on the sale.
Weigh up the possibility of a short sale
If you’re entirely underwater on your home loan and the market value of your house has been better, you may want to consider a short sale. This is where a home will sell for less than what is still owed on the mortgage. Instead of the seller taking any profits, the lender receives any and all gains from the sale to forgive the seller of any debt.
Another option is to wait it out – if you can, financially – and be patient until the housing market upticks and you can receive a good offer for your property.
Make sure you enlist the help of Andraya Coulter to find the best home loan to fit your needs and your budget. I assist California and Texas with all their home loan needs. Contact me to get started today!