Sell or rent my home?

[Kamal F.]

Hello all,

Thanks for any help in advance.

I am currently making a permanent relocation in another part of the SF Bay area, and it looks like, for the next 2-3 years, will have to rent. I'm trying to figure out if I should sell my primary residence, or turn it into a rental property for the next couple years, and sell before I lose my tax deduction exemption. I've lived in it for the past 3 years. Here are some details:

New rental home cost = $2200/mo.

Current home worth ~$550K. Property tax assessment = $410K land, $40K improvements (building) = minimal depreciation deduction.

Current home will rent for at least $2200, up to $2500.

Mortgage on current home = $295K, $1350/mo.

Property tax on current home = $550/mo

Homeowners Ins on current home = $75/mo

Current home will likely not go up in value very much over the next 3 years.

So, is it a better financial plan to rent the current home, and be able to take tax deductions, and assume negligible effort as a landlord, or sell the home, and invest the ~$250K cash that will come out of the sale?

One other question - is there something I can do about the disparity between the land value and the improvement value in order to have a better depreciation deduction, assuming I rent the home out? This is a 1948 home in good shape, some updates, including a detached 450 sqft garage built in 1985.

Many thanks!