Rent Now, Sell Later: How to Rent Your House Without Closing the Door on a Sale

Maybe the market isn't where you want it. Maybe you just need a little time before you decide. Whatever the reason, renting your house now and selling it later is a common plan, and it can work well. The key is setting it up from the start, so that when you're ready to sell, the house is ready too.

Why owners rent first and sell later

• The rent covers the bills while you wait. Rent can cover all or most of the mortgage, taxes, and insurance, instead of you paying them on an empty house. (Here's what an empty house really costs you.)
• You keep a good mortgage rate working for you. If you have a low rate, renting lets you hold on to it. We walk through that math in Should I Rent Out My House or Sell It?
• You don't have to sell in a hurry. If your listing didn't sell or the offers were too low, renting buys you time instead of forcing a price cut. See Your House Didn't Sell. What Are Your Options Now?
• The house stays lived in. Someone is there to notice a leak or an AC problem before it turns into a big repair.

Plan the lease around your sale

The most important decision to make before putting your home up for rent and signing a lease with a tenant is deciding what your timeline looks like.

1. Pick a rough sale date and work backward. You don't need an exact date. A general idea, like "about two years from now," is enough to plan the lease around.
2. Choose a lease length that fits. Twelve months is the standard. If you think you'll want to sell sooner, or you're not sure, talk about a different term before anyone signs. One thing to know before you go short: in Florida, a rental of six months or less is taxed like a vacation rental. The rent is subject to state sales tax, the county's sales surtax, and the county's tourist development tax, which together come to about 13.5 percent in Hillsborough County, 13 percent in Pinellas, and 12 percent in Pasco (section 212.03, Florida Statutes). On $2,500 a month, that's more than $300 a month on top of the rent. A written lease for longer than six months isn't subject to those taxes, so a seven-month lease can give you a shorter term without the extra cost.
3. Be upfront with applicants. If you plan to sell when the lease ends, say so. Some tenants want a home they can stay in for years, and it's better for everyone to find that out before they sign.
4. Know Florida's notice rules. If your lease requires notice before it ends, Florida law says that notice must be between 30 and 60 days, and a landlord who isn't renewing must tell the tenant within that window (section 83.575, Florida Statutes). If the lease has ended and the tenant is renting month to month, either side can end it with at least 30 days' notice before the end of a monthly period (section 83.57).

Selling the house does not end a lease. Even if the home transfers to a new owner, the lease is legally protected and must be honored. This is why planning out your timeline before signing a legally binding contract with a tenant is so important.

Why we don't recommend selling with a tenant still living there

You're allowed to sell a house with a tenant in it, but we don't recommend listing it that way. Here's why:

• It takes longer to sell. Showings have to work around someone else's schedule, and buyers have a harder time picturing themselves in a home full of another family's things.
• It's hard on the tenant. Strangers walking through their home week after week wears on anyone, and an unhappy tenant rarely keeps the house looking its best.
• It's hard on you. A slow sale and a frustrated tenant is a stressful combination.
• The lease comes with the house. In Florida, a lease stays in effect after a sale, and the buyer takes over as the landlord. That limits you to buyers who want a rental property, or who don't need to move in right away, which usually means fewer offers.

Our advice is simple: let the lease end, let the tenant move out, then get the house ready and list it.

One exception worth asking about: your tenant. If your tenant wants to buy the house, that's a different story. There are no showings to schedule, and a tenant who already loves the home can be an easy buyer. It's worth asking before you list.

Keep your capital gains window in mind

If you lived in the home for at least two of the five years before you sell, you can generally keep up to $250,000 of profit tax-free, or $500,000 for married couples filing jointly. After you move out, that usually gives you about three years to sell and still qualify, and renting during that time doesn't reduce the exclusion.

If you're counting on that tax break, count backward from the three-year mark. Make sure your last lease ends with enough time to get the house ready and sold before the window closes. One thing to know: the depreciation from your rental years is taxed when you sell, even when the rest of the profit isn't. Run your timeline by a tax professional.

Budget for what changes while it's a rental

A few costs go up once the house becomes a rental, so plan for them from the start:

• Property taxes. Under Florida law, renting out a home you've claimed as your homestead counts as abandoning the homestead (section 196.061, Florida Statutes), so the exemption ends and your tax bill will likely go up. Our guide to renting out a Florida homestead explains what to expect.
• Insurance. You'll need a landlord policy instead of a homeowners policy, plus flood insurance if your home requires it. Our guide to landlord insurance in Florida covers what changes.
• Repairs. Set aside a little each month, because air conditioners and water heaters don't wait for a convenient time to break.
• Management. If you won't be managing the home yourself, budget for a property manager.

Leave time between move-out and listing

Don't plan on listing the home for sale the day after the lease ends. Give yourself time to:

1. Walk through the house at move-out. Compare it to the condition it was in at move-in. We take a video before every tenant moves in, so we have a clear and fair record of the condition of the home before and after the lease.
2. Handle the deposit. In Florida, the landlord has 15 days after the lease ends to return the deposit if there's no claim, or 30 days to send written notice of a claim by certified mail or email (section 83.49). Our guide to Florida security deposit rules walks through the details.
3. Refresh the house. Fresh paint (if needed), a deep clean, and any repairs from normal wear and tear go a long way with buyers.
4. Take photos and list. Once the house looks its best, it's ready for the market.

One team for both ends

Tampa Bay Rentals is the property management side of Gold Palm Homes, a licensed Florida real estate brokerage. That means the same team can find and manage your tenant now, and help you sell when you're ready. We'll already know the house, its history, and its condition, which makes the handoff from rental to sale a lot smoother.

The first step is knowing what your home would rent for. Our free rental analysis gives you that number, based on your home and the rentals around it, along with anything the home needs before a tenant moves in. If you'd like to see how rent is priced first, read How Much Rent Can I Get for My House in Tampa Bay? And when it's time to sell, our sales team at Gold Palm Homes can take it from there.