Is it worth renting a house?

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Many of those who are owners of a second home sooner or later have to choose whether to give their apartment in rent, or continue to hold it vacant. It is not an easy choice, which involves various pros and cons. Then, there is also the classic case of those who think of buying an a

 

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If you too are among the homeowners who are trying to understand what is really in their interest, in this post you will find some ideas.

Let's start by saying that many begin to consider the decision to rent a house when they realize that the IMU on the second home is a difficult burden to bear. Choosing to rent a second home is the easiest way to cover the costs of the IMU, and to obtain additional income.

However, not everyone agrees with this point of view, and there are also those who object that the best way to profit from a second home is to sell it. Instead of taking sides in the field of those who prefer the sale of a second home to rent, we prefer to list all the pros and cons of renting a house.

Renting a House: The Cons

Let's start by illustrating the cons of renting a house. You have surely heard many owners from many places complaining about how:

  • taxes and levies take away most of what they get from the rent
  • finding tenants on time to pay is increasingly difficult

These are two points cited more and more often by those who in principle are against renting a house, because they think that ultimately this choice is not worthwhile. But let's look at the facts.

Is it true that taxes make it cheap to rent a house?

In our opinion this is not the case, and for two reasons:

  • if those who complain about second home taxes really operated at a loss, they would stop renting their apartment. If, on the other hand, they continue to have tenants, there will be a reason
  • the argument that "taxes take away all rental income" is actually more complicated than bar talk

The profitability of your apartment is influenced by five factors:

  • the actual profitability of the area where the property is located
  • the maintenance status of the property
  • the cadastral value e
  • the IMU rate established by your municipality
  • the average income in the area of ​​your apartment

The first question to ask when hearing these complaints is very simple: in what area is the apartment located? Is it an apartment in the center of a big city, such as Turin or Milan or Rome, or a two-room apartment in a village of 1000 souls?

After that, you must also evaluate the state of maintenance of the property: is it a house with moldy walls, which have not been repainted for years, or an apartment in an excellent state of maintenance?

And what about the cadastral value of the property? Clearly the IMU represents a significant burden for homeowners, but the IMU rates are not the same in all cities. Then consider that in cities where wages are higher, rents - in proportion - are also higher.

So it is not possible to say that renting a house is not worthwhile on the basis of general complaints. Each of these factors must be evaluated. However - as often happens when you complain - precise information is not given on how much you earn each year from your property.

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The risk of arrears

In our opinion, the real risk associated with choosing to rent a house is completely different, and it is the risk of arrears. If this risk becomes real, then the discourse is different, and one operates at a loss.

However, identifying and preventing the risk of arrears is possible, and it is also very easy. There are those who ask the tenant to present appropriate guarantees. This is a good solution, but we have learned of cases where tenants with highly respected collateral suddenly stopped paying their rent. And it was not possible to claim against the guarantor.

A better solution is to ask a potential tenant to submit references, and then contact their former homeowners. Be sure that - if you adopt this method - you will receive reliable information, from people who have very similar interests to yours.

Rent House: The Pros

Renting a house has several advantages. Here we only list the ones that are common to all homeowners. In fact, some advantages can be very individual, and depend on very specific situations.

Leasing House Guarantees Additional Income

It is true that income taxes, including rental income, have some consistency. But in any case, renting a house is a source of a fixed monthly income.

Renting your own apartment helps to maintain and increase its value over time

Let's face it: the houses left vacant for long periods do not have the same state of maintenance as the houses in which someone lives. This is something that those who have a vacant holiday home for years now, where they may never go, know well.

Read More: PropertyNews

 

The presence of the tenant is useful to keep all systems in working order, preventing them from deteriorating due to disuse. In addition, the tenant will also take care of the ordinary maintenance of your apartment, as this is his responsibility.

Over time, the value of your home on the rental market will remain stable

Consider that the rental market has a very stable trend, which has not changed for decades: rents tend to constantly increase. Short periods of economic crisis can lead to a temporary drop in the rent. But if you compare the level of rents 20 or 15 years ago with the current level of rents, you will realize that this is perhaps the only market that is constantly growing.

 If you choose to rent your apartment, you can enjoy tax relief

We are talking about the dry coupon: if you choose to rent your home with the flat coupon option, the rental income will be taxed at 10%.

Clearly, if we compare this taxation regime with the free-rent income tax regime, which is 21%, the differences are obvious. But in our opinion this is not the reasoning to be done.

To understand if renting a house is really convenient for you, you have to compare the taxation regime of the income from coupon dry, to the taxation regime of a different type of activity.

For example, if you choose to open a business, how much should you invest? What is the gross income you would make each month? What would be the tax rate of this income? And finally, how long should you spend each day following your business?

If, on the other hand, you already own a second home, no initial investment is required.

Maybe the income you earn each month is lower than the income a professional entrepreneur receives, but if you already have a job it is still a good source of additional income.

When it comes to investment taxation, a tax rate of 10% is unbeatable. Finally, renting your home requires very little time. Once the lease is concluded, you simply need to start collecting the rent.

Source: Business World