Should you sell or rent out your property?

If you own a property and are thinking about what to do with it, selling and renting it out are two very different paths. Each has financial, practical, and personal implications worth thinking through carefully before you decide.

The Case for Selling

Selling makes sense in a number of situations:

• You need the equity from the property to fund your next purchase or another financial goal
• You don't want the ongoing responsibilities of being a landlord
• The property requires significant repairs or upgrades that you'd rather not invest in
• Market conditions are favourable and you want to lock in your gain
• The property is in a different city or province and managing it remotely is impractical

Selling gives you a clean break and immediate access to your equity. The trade-off is that you give up any future appreciation and ongoing rental income.

The Case for Renting It Out

Renting out your property makes sense when:

• You don't need the equity immediately
• The rental income covers your carrying costs and ideally generates a return
• You're open to the responsibilities of being a landlord or are willing to hire a property manager
• You believe the property will appreciate over time and want to hold it
• You may want to return to the property or use it again in the future

Renting out gives you ongoing income and keeps the asset in your portfolio. The trade-off is that you take on legal obligations as a landlord and your capital remains tied up in the property.

Key Questions to Ask Yourself

• Do I need the money from a sale now or in the near future?
• Am I prepared to deal with tenants, maintenance, and potential vacancies?
• Does the rental income cover my mortgage, taxes, insurance, and maintenance costs?
• What are the tax implications of each option in my situation?
• What are current market conditions telling me about timing?

Get Professional Advice

Both decisions have significant tax and financial implications. Speaking with a financial advisor and a tax professional before deciding is worthwhile, particularly around capital gains tax on a sale versus rental income treatment.