Rent and Wait, or Sell and Cringe?

Q We have lived in our house for 15 years and have decided to move. We bought a new house six months ago and tried to sell our old one "by owner." We had no success. We had a real estate agent give us a price that he thought the home would sell for. My husband did not like that number. He thinks prices will come up again.

Do you think we should sell our home at the going rate or rent it out for a while until the prices come up again? I'm not sure they will, so I think we should just sell it at the best offer, but we thought we would ask for your professional advice.

AMy "professional advice" is probably as good -- or as bad -- as that of anyone else who is trying to predict when or even if the real estate market will bounce back. Whether to sell or rent is a personal question that only you and your husband can decide, after taking into consideration a number of important factors. Here are some things to consider:

· Tax implications. I suspect that during the 15 years you have lived there, your house has increased in value. You do not want to get hit with capital gains tax on the profit you have made. That means you will have to have lived in the house for at least two of the five years before it is sold. If you can meet this test, and assuming that you and your husband file a joint income tax return, you can exclude up to $500,000 of the gain from tax. (Single people and those married but filing separately can exclude up to $250,000.)

This means that if you move out and rent the house, you want to sell it before three years have elapsed.

Selling a house that has a tenant is not always easy. Some tenants do not keep the house in the same condition that you or a potential purchaser would like. Some tenants refuse to let you show your house to prospective buyers, even if your lease specifically permits you to do so. You may have to take the tenant to court to get a judge to order showings.

Thus, even with the best intentions of selling the house within three years, you may find yourself thwarted and so lose the valuable tax exclusion.

· Being a landlord. Not everyone is cut out to be a landlord. You have to learn the local landlord-tenant laws and make sure that your lease conforms to those laws. For example, some jurisdictions place limits on the amount of the security deposit you can collect when you lease the house. In the District, tenants have a number of rights they don't have elsewhere, including the opportunity to buy the house even if you find a buyer.

If a tenant does not pay rent, eviction can be time-consuming and expensive.

More important, do you want to get calls in the middle of the night complaining that the toilet is overflowing or that the roof is leaking?