Renting out the house for a big trip

Keep your house if you can.

If you sell it, you have to clear out, sell, store your furniture, pay agent selling fees. If you invest the proceeds, you have to pay tax on the interest.

Then when you buy again (if you can get something) you have to pay stamp duty again, legals again, and re-furnish.

I met many people while travelling who had sold their house, used some of the money for their travels, and then had no chance of ever buying again due to the boom in prices.

Those people are now true Grey Nomads because they have no home and no job prospects to settle again. I wouldn't want that as my only option.

Good luck.

We did it both ways over the years. The first time we let it out for twelve months and put the furniture in storage. It worked very well and the family we let it to really treated it well and left it as they found it.

The next time we had decided that we would move out of the ACT so we sold the house and put the money into term deposit.

Now that worked for us because we bought a house in Forbes at a lot lower price than we had slod our house in ACT for. It may not have worked as well if we wanted to buy again in the ACT as house prices had gone crazy.

Thecastles,

So long as you have been in your property for at least 12 months, you are entitiled to rent it out for a total of 6 years before you would have to pay capital gains tax on the portion of the house that appreciated in value whilst it was rented out. So long as you don't buy another house this would apply. You would be better off trying to keep the house. Sell stuff that you really and truly don't need, this helps pay for storage and put some money aside for maintenance.
When you return you move straight back in and take over. There will be no capital gains issues.
Cheers

If I was you I would rent it out and when you come back either rent a place or if you have some equity in the current one buy another place

keep hold of it if you can

in my area, you would be hard pressed to save (post tax) earnings at the same rate that houses have gone up in value

this is probably similar across alot of Australia

Hi to TheCastles,
I agree with all that has been posted. I would strongly recommend to keep the house at all costs if you can afford to do it. The costs of getting out of (agents commission) and then back into the market later (stamp duty etc) are quite substantial. Depending on which state you are in I would say this could cost you possibly $20,000. As you have already owned a home you will no longer get a discount on stamp duty as a first home owner again (some states).
I would dispose of any things you don't need (garage sale) an put the rest in storage. Get agent to deposit rent into same account your home loan is debited from - just use internet banking while travelling to check monthly balance is adequate for mortgage repayment. A good agent may even be happy to pay outgoings for you (rates, insurance etc) by authorising them to deduct such expenses from your account. There are a few things to organise but I think you will be well ahead by keeping the house. Even if you have to spend a little on your return to freshen it up (painting, carpet cleaned etc) I still think you would be ahead financially.
If you sold out and the market rose strongly you may find you cannot afford a house anywhere near as good as the current one.
This is what I would do
Cheers and all the best for your trip
Glen

We rented our house for 12 months and did the round oz trip and it worked well. Before you know it the year is over and real life kicks back in so don't burn your bridges. Mind you this was in 1983 and I don't think our mortgage was that high. We were married for three years and first home buyers also.Go for it and have a ball. Christine

Hello Castles,
Don't sell the house under any circumstances. If the choice is the house or the trip , don't go! Wait a few years.
Consider a lock-up shed or shipping container in your yard as storage.
Advertise rent at a lower price to get a wide choice of tenants so you can choose someone you are happy with. Most tenants are good to deal with, but be prepared to replace your carpet when you get the house back.

I would not sell the house. This way you remain in the market and should there be any sharp increases in home prices you are no worse off. Have a chat to the local real estate people so that you can get an idea on what the house will rent for and this will allow you to look at your travel budget. There is quite a bit of info around on what the cost of travel is and what you can save on.

All the best


Mark

Hi again,
Just another comment re my Reply 6 above.
If your mortgage repayments are considerably higher than the rent and this will be a problem to cover the difference for 12 months while you travel there is an option to consider. See if your lender will allow you to change the loan to interest only for the 12 months. This will reduce the monthly repayments considerably as you are not paying back any principal. But if it means you can keep the house it is worth it - it just means at the end of the year you still owe the same amount. I know many non-bank lenders such as Wizard Home Loans have this flexibility which can be greatfor anyone who runs into temporary financial difficulties due to loss of job etc. So my advice would be to prepare a budget for the 12 months you will be away to see how the figures come out for your travel expenses, topping up any defecit between rent Vs mortgage etc. A good budget for the year (with a good contingency buffer) is essestial.
Hope this helps,
Cheers,
Glen

Hi the Castles,
We are looking at doing the same thing we intend to rent ours rather than sell. We thought about it and decided that by the time we came back we would repaint it and recarpet it and that would work out the same as agents fees if we sold it and if you do it in the same financial year it is a tax deduction. We rent out a set of duplexes and our agents arrange to have all repairs fixed but as we live in the same town they check with us first but often we get someone to do it rater than take time off work. So you wont have to worry about that.
barb