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Tuesday, October 13, 2009

The Reluctant Landlords

"With housing prices still in the dumps, many Americans are finding themselves in the uncomfortable position of landlord.........Experts generally advise against becoming a landlord in hopes of recouping lost home value......................The calculation isn't the same for all homeowners. Those who have paid off their home or have a small mortgage balance may be able to wait out the market. And there are pockets of the country—Houston is one—where home prices haven't fallen as hard. Some homeowners may want rental income to supplement retirement savings...............a landlord policy covers the loss of rental income if a fire makes the house uninhabitable. It costs about 25% more than a standard homeowners policy, according to the Insurance Information Institute.................Renting for an extended period can eliminate or diminish the value of capital-gains tax exclusions. Federal tax law requires you to live in the house at least two years of the previous five in order to qualify for the full capital-gains tax exclusion upon sale of $250,000 for a single person or $500,000 for a couple, with some exceptions." ( Realty note: I recommend reading the "Comments" tab on any of these WSJ articles of interest - the round table like discussions will help you digest the jest of the column )

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