Buying a Rental but can't get a tenant


Hi, I bought a rental property but it looks like I can't find a renter for the amount I need to even be within $500 a month of my expenses.

If I go ahead an sell now, will I only be subject  to capital gains and not straight income tax since my intent from day 1 was to rent the place out?  I can't be expected to rent out the place and lose $600 a month can I?
(I will of course suffer the 3 months interest penalty from the lender)

david ingram replies:

If you can show a real effort was made to rent and your situation has changed, capital gains would likely be in order.

I do not know how much your 3 months interest penalty is but it would likely pay the after payment on $100 a month for 3 or more years. 

i.e. $100  amonth after the tax deduction is only $60 to $75.00 a month.

If your interest penalty is 3 months of a $200,000 mortgage at 6% , then your interst penalty will be $3,000 and only half is deductible against the capital gain meaning it will be at least $2,400.  $2,400 / $75.00 a month equals 32 months..  $2,400 / 60 = 40 months.  In the meantime, there would be three rental increases.

You might want to think about it a little more. �