Primary Residence to rental home due to reolocation - call with lender

[dean2019]

Hello All,

I have posted on this topic previously but wanted to share an update. We have lived in our current home for over 3 years. In this time family has grown. We need a bigger place and also want to relocate closer to company headquarters. We have a 30 year fixed mortgage at a great rate. There doesn't seem to be anything in our loan suggesting that we cannot (after the first year) consider making the home a rental or secondary property. However, just to be sure, we recently called the lender. It seems they just emphasized that we continue to pay our mortgage and there should be no issues should we decide to rent the home or make it secondary. The lender also said "make sure you inform the county for tax purposes". This is where I got a little confused. We already pay real estate taxes to the county. I am wondering if she meant that come tax time, the home (if rented) should be listed as rental property and not primary residence? I am not sure how else I would go about "informing" the county. If anyone has any idea of what the agent was trying to suggest here, please let me know. Thanks as always!

Dean

[jebmke]

I’d just send the county a letter telling them what you intend to do and the effective date. I assume they will let you know what that means for your specific county. It could be that business property is taxed differently in your county.

[exodusNH]

Hello All,

I have posted on this topic previously but wanted to share an update. We have lived in our current home for over 3 years. In this time family has grown. We need a bigger place and also want to relocate closer to company headquarters. We have a 30 year fixed mortgage at a great rate. There doesn't seem to be anything in our loan suggesting that we cannot (after the first year) consider making the home a rental or secondary property. However, just to be sure, we recently called the lender. It seems they just emphasized that we continue to pay our mortgage and there should be no issues should we decide to rent the home or make it secondary. The lender also said "make sure you inform the county for tax purposes". This is where I got a little confused. We already pay real estate taxes to the county. I am wondering if she meant that come tax time, the home (if rented) should be listed as rental property and not primary residence? I am not sure how else I would go about "informing" the county. If anyone has any idea of what the agent was trying to suggest here, please let me know. Thanks as always!

Dean

Some locations may tax rental properties differently. A related idea is Florida's homestead exemption is basically a property tax discount for people's primary residence.

[quantAndHold]

Call your county tax assessor, and tell them your tale, and ask what to do.

When I was in a similar situation, I didn’t even think about this, and the county and the city both figured it out on their own somehow. In my case, there was also a city rental tax that I owed. Fortunately, it was small.

[BrendanP]

As others alluded to, ..In NYC, we qualify for certain tax exemptions but it has to be your primary home.

[safari]

In CA, for example, there is a $7,000 homeowner exemption (reduction in taxable value) that applies to the primary residence. If you no longer use the property as the primary residence, you have to notify the county to remove the exemption.

https://www.boe.ca.gov/proptaxes/homeow ... mption.htm

[dean2019]

Thanks so much everyone, appreciate the input. It makes sense now. I will contact the County to see if there is any tax impact or need to formally notify them.

[pizzy]

Hello All,

I have posted on this topic previously but wanted to share an update. We have lived in our current home for over 3 years. In this time family has grown. We need a bigger place and also want to relocate closer to company headquarters. We have a 30 year fixed mortgage at a great rate. There doesn't seem to be anything in our loan suggesting that we cannot (after the first year) consider making the home a rental or secondary property. However, just to be sure, we recently called the lender. It seems they just emphasized that we continue to pay our mortgage and there should be no issues should we decide to rent the home or make it secondary. The lender also said "make sure you inform the county for tax purposes". This is where I got a little confused. We already pay real estate taxes to the county. I am wondering if she meant that come tax time, the home (if rented) should be listed as rental property and not primary residence? I am not sure how else I would go about "informing" the county. If anyone has any idea of what the agent was trying to suggest here, please let me know. Thanks as always!

Dean

Is this another "I want to become a landlord because my mortgage rate is low"?

There are way too many of these posts for them all to end well. Red flag alert.

We've moved on to timing the landlord market.

[cchrissyy]

it is unlikely your current house makes sense as a rental, even with a good rate.

the other people you need to contact before renting is the insurance company.
landlord policies are different from homeowners and you need to see how it affects the price.

[Enzian]

The lender also said "make sure you inform the county for tax purposes".

This could mean nothing more than providing your new mailing address. The county will maintain two addresses for the tax account: (a) the property and (b) the taxpayer’s mailing address.

[CRC_Volunteer]

Where I live (mcol) a home that is no longer your primary residence, will have a property tax increase approximately 3x.