Preparing to do a lap of Australia or travel indefinitely is exciting. As a homeowner, before you set out on the road, you must decide what to do with your home. So, is it better to sell or rent your house to travel?

Deciding what to do with your home feels like and is a big decision. It can have long term consequences, so it is a decision you want to get right for you.

Let us be clear; there is no “right” or “wrong” decision here. As it often is, there is only what best suits your circumstances and you (and your partner or family).

Sell or Rent Your House to Travel

What should you do with your home when you travel? Let’s consider the options.

Option 1 | Sell

Selling your home is an option. Let’s consider this.

The Potential Benefits of Selling Up

The main benefit or reason to sell your home is to make a profit, that is, turn your equity into cash so you can:

The Potential Disadvantages of Selling

Selling your home for ongoing travel is not without its potential disadvantages: 

Selling and Breaking Even OR Selling At A Loss

Not all home sales result in a profit. There is not always enough equity to make a profit. I strongly encourage you to seek professional advice before deciding to sell if this could be you. 

Selling your house and breaking even or at a loss, in addition, to the financial implications, could also have an emotional or psychological impact. For some, there could be a sense of relief. For others, it could raise negative feelings of regret and even anger. 

Loss of Home Ownership

The loss of home ownership is a potential disadvantage. The risk is not being able to afford to get back into the housing market or ability to meet lending criteria such as long term steady employment. It is for you to decide how important it will be that you can purchase another property in the future. 

What Could Determine if You Will Make a Profit or Not

Some factors to consider when making the decision to sell and whether or not selling will make you a profit are:

Re-entering the Housing Market in the Future

There are options to consider to help increase your odds of reentering the housing market after you travel:

Funds for Future Purchase

Something to consider is, saving all or some of the profits for a future property purchase. How much is something only you can decide. It may help to keep in mind factors such as:

Purchase a Smaller Property

The idea here is to sell your current house and purchase another which is cheaper, possibly in your desired area, so that:

These are all well and good. The other things to consider are:

Sell or Rent Your House to Travel

Option 2 | Rent

Another option is to maintain ownership of your home and lease it generating a regular rental income.

Long Term Tenancy

Leasing your property through a tenancy agreement for a set amount each week is a viable option for travellers. 

Overall benefits of renting out your home are:

Risks to Consider:

Putting tenants in your home has potential risks, which may include but are not limited to:

You also need to decide:

Renting out your property even when all goes well, which often it does, is never a ‘set and forget’ scenario, so you have to be financially and mentally prepared for this while you travel.

Holiday Letting

Holiday letting your home to guests at a nightly rate for short periods is an option that can bring high returns, particularly in high tourist areas. 

Expenses are also very likely to be high. Things to consider are:

Higher returns of holiday letting can be very appealing and could be the better option in your circumstances but do your research first. 

The Good News: Principal Residence Capital Gains Exception

Capital gains is a tax paid on an investment property. 

A tax rule allows an exemption on the capital gains tax when the property rented is your primary residence, even if you are not living in it. You can rent your family home for up to six years and not pay capital gains. 

A summary of the rules is:

Option 3 | House Sitting

Having someone/s stay in your home for free in return for them caring for your property and pets is another option.

Various websites are providing a space to match you with house sitters. House sitters can often provide references and are often travellers themselves. That said, of course, it is not without its risks, such as the house sitter cancelling, being unreliable or causing damage.

Option 4 | Leave Property Vacant

Leaving your house vacant without a no tenant or house sitter is an option. The risk with this option is that a vacant property may be more prone to theft or damage. An advantage of this option is that you can return home anytime without considering house sitters, tenants or holiday guests.

Sell or Rent Your House to Travel? What Did We Do?

Rent. Our home, is leased with long term tenants.

The reasons for our decision are:

The six year capital gains exemption,
The rental income is sufficient to pay the mortgage and the other relevant expenses,
Being landlords is not new to us and we understand the rules and responsibilities to tenants, the risks and the rewards (income, tax implications) and are comfortable with these,
We wanted to stay in the Sydney property market,
We are in our 40s and fund our travelling by working,
We do not want struggle to get a home loan in the future, and
We were able to save for our travels.

Our home is in an area where growth is strong. We have been glad we have not sold. The value of our home has increased significantly and while we never want to live in Sydney again, we will have more money to put toward another purchase in the future.

Note this is a basic summary as to why keeping our home and renting it was the decision we made for us. Whatever decision you make has to be what suits you and your circumstances.

It is advisable to seek professional advice from a financial advisor when making significant financial decisions. And if anyone tells you their opinion, smile knowingly and go ahead and make your own decisions.

Before starting our life on the road, we were homeowners with a mortgage. We had purchased our home as a “renovators delight” a little over ten years ago and had completed renovations.

Related read: Packing Up Your House To Travel And Storage

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2 Responses

  1. Can the rent income be offset by mortgage payments? We are pensioners and fear that the rent income will diminish or cancel our pension.

    1. Interest on a mortgage is an expense claimable on your tax. However the actual mortgage repayments are not.
      Any rental income will impact your pension. By how much will depend on your personal circumstances so it is best to speak to a financial advisor before making a decision.

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