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Renting our home and moving into a Motorhome

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My job is changing and we have the opportunity to rent out our home and move into a motorhome for a couple of years.  We will relocate 3 hours away from our home, and one possibility is to live in state parks or rv parks near my new job.  If we do this, how do I keep my homestead exemption? I will have to forward my mail, will that trigger an alarm with the county property officials?  How can I vote in my home district?  Is there somewhere I can go to find answers to these questions that new full timers have?  I would like to avoid making mistakes, and do this correctly the first time. I appreciate the advice of those who have already made this journey.

Thanks,

 

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The answer to that probably depends mostly on which state you are in as each one has their own rules. Most states that I'm familiar with require that you occupy the property, but that may not be true where yo are,  

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State, federal and territorial homestead exemption statutes vary. Some states, such as Florida, Iowa, Kansas, Oklahoma, South Dakota and Texas have provisions, if followed properly, allowing 100% of the equity to be protected. Other states, such as New Jersey and Pennsylvania do not offer any homestead protection.

 

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From the Florida Department of Revenue:

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When someone owns property and makes it his or her permanent residence or the permanent residence of his or her dependent, the property owner may be eligible to receive a homestead exemption that would decrease the property’s taxable value by as much as $50,000. This exemption qualifies the home for the Save Our Homes assessment limitation. While the exemption is nontransferable, a homeowner may be able to transfer or “port” all or part of the assessment difference to a new Florida homestead.

You probably need advice from a real estate attorney.

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IIRC, you CAN NOT declare a homestead exemption on a rental property in Fla.  It has to be your primary residence.  Considering the tax value of the exemption, your rent should more than cover what you would lose with no exemption.

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As a former landlord, why not sale since you already looking at minimum 3 years. I see this arrangement as just trading dollars of an asset that grows in value for an asset that falls very rapidly in value. Some renters take great care of the property and some can tear it up so bad the rent doesn't cover the repairs.  Think phone call at 2am wanting to know why the AC isn't working and is the service guy in the driveway yet.

Remember the rent received is taxable income and if you still have a mortgage only the interest portion is deductible. There is expenses that are deductible but is it worth it on one house

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We rented our house out for four years . 

It took us three weeks solid ( no days or other time off ) of eat , sleep , work , work and more work to get the house into enough of acceptable shape for the sale . The work was bad enough . The cost twisted the knife a few more turns . 

Guess what . We'll never be landlords again .

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1 hour ago, Pat & Pete said:

We rented our house out for four years . 

It took us three weeks solid ( no days or other time off ) of eat , sleep , work , work and more work to get the house into enough of acceptable shape for the sale . The work was bad enough . The cost twisted the knife a few more turns . 

Guess what . We'll never be landlords again .

 Get the current rule from tax guy. Once you rent it you lose your " tax free income from sale of your home " . Check it but you would have to move back in for 3 years to get the income shelter at sale back . If you try and hide the rent or take the tax free income the IRS calls that FRAUD.

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4 hours ago, Poohbear said:

 Get the current rule from tax guy. Once you rent it you lose your " tax free income from sale of your home " . Check it but you would have to move back in for 3 years to get the income shelter at sale back . If you try and hide the rent or take the tax free income the IRS calls that FRAUD.

No Fraud . Everything was done by the book . That was 4 years ago . 

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Besides having to declare the rent as income and losing the right off. If you rent it for three years and then decide to sell it. You will have to pay Capitol gains above your basis cost, as it was not your domiciled residents for 3 out of the past 5 years. I would just sell it. Finding a great tenet that pays you on time and takes care of the property is a rare one to find.

If you need to update the house renting it maybe an angle to writing off the remodeling as it would be for a renter. There are a lot of angles depending on what your goals are.

Edited by rynosback

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3 hours ago, Pat & Pete said:

No Fraud . Everything was done by the book . That was 4 years ago . 

Not meaning to say you did, just reminding OP of things not to do. 

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33 minutes ago, Poohbear said:

Not meaning to say you did, just reminding OP of things not to do. 

I figured as much , but , answered just in case . ;) ,

 

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The homestead exemption in most States requires that you occupy the residence. However the exemption applies to liens against the property. If you have enough insurance you should not have to worry unless the judgement is more than the value of the property. Any rental income received will be taxed but if you have a mortgage the entire payment, principal, interest and any impounds for property tax and insurance is deductible as well as depreciation which offsets most of not all of the taxable income. If you hire a property manager, the management fee is also deducted from the rental income. If you have a HOA, it is also deducted from the rental income. Capital Gains upon sale is different from income tax. In order to defer Capital Gain tax you must have lived in the property for 3 out of the last 5 years. You can move back in for 3 years and then re-qualify. All depreciation will be recaptured upon sale, as an adjustment to your basis. Alternatively, if you decide to sell but buy another rental you can do a 1031 Tax Free (actually deferred) Exchange. With appreciation you should come out ahead of the game. Rental property is a good investment, with the help of a property manager. You definitely need to consult with a Tax Lawyer or CPA taking into account your personal situation. 

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This is amazing, you guys are bringing up stuff I never thought of. Thank you so much for all of your valuable input.

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  To spcifically answer your question, no, you may not retain your homestead exemption if you rent out your home, according to the Pasco County Property Appraiser.

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