Primary residence sell or rental ?

[Prasad Gupta]

I am planning to buy a new primary residence. 1. Would you sell your house and take advantage of not paying capital gains ? 2. Would you rent it ? Thanks

[Dave Foster]

@Prasad Gupta, If I told you I would pay you $14K every year if you would give me $550K to use for my own purposes would you do it?  That's the question you're asking.  You have an asset worth $550K and you think you can get $14k (thats assuming taxes insurance, allowances etc) from deploying that $550K.   

That's around a 2.5% return on your money which isn't so hot once you take into account inflation.  Yes appreciation might be there.  But it might not either.  And to top it off, if you sell now you net around 20% more because it will be tax free!!!!!

Nice primary residences seldom make the most efficient rental properties.  Sell, take the money tax free and use some of it to reinvest in other properties.