Russ Wiles at the Arizona Republic does a great overview of the issues in renting your home.
With prices trending lower at the moment I wouldn’t recommend converting a primary residence into a rental unless you have a long investment horizon. There is a risk that your home could be worth less a year from now or 2 years from now.
The problem with renting it out is if you don’t sell your former primary residence within 3 years of starting to rent it out, you will lose the $250,000 ($500,000 married couple) capital gains exclusion from federal taxes. If you have a lot of equity in your home, you probably don’t want to lose that capital gains exclusion.
So with the information in hand this evening, I wouldn’t recommend converting a primary residence that has appreciated a lot into a rental, unless you’ve discussed it with your accountant or tax adviser.
My main point is you should be aware there are potentially HUGE tax implications of converting your primary residence into a rental so you will want to talk to your tax adviser before making a decision.
When home values were appreciating quickly, it was a spectacular strategy to hold on to a primary residence for an extra year or two before selling in order to harvest additional appreciation. When home values look like they could actually depreciate, a safer strategy is to sell ASAP.