“We’ve outgrown our home. Should we sell it or keep it?”

One reason we encourage young people to buy a home is to have equity they can use to buy up later. But there are reasons to consider not selling that first home, and instead keeping it as a rental. If you or someone you know is thinking of moving up, here are some possible reasons to hold onto that starter.

1). By keeping your home as a rental, you start building a real estate portfolio without having to come up with an additional 20% down payment to buy a separate investment. 2). If you have a lease in place before you buy your next home, your mortgage broker may be able to count a portion of the lease as income. 3). You could get a depreciation tax benefit; but check with your accountant, as laws vary widely by location. 4). Knowing a home inside and out makes it a better rental than one you buy on the open market.

Of course, if your starter is in an area that has low rental demand, you may have more vacancies or lower rents. Also, if you need your equity for a down payment to afford your next property, you may need to sell.