We are moving out of state for a job and need to rent our home, as the market is saturated with homes preventing us from selling. I do not want to lose the tax advantages of having the primary residence write off, and am concerned about how this wil affect our taxes. We will be renting in our new community.

We will be carrying close to 500 a month in overage as we cannot rent it for the amount we pay in the mortgage. We purchased this home in Sept 2009 and wil be looking to rent it by Aug 2011. Our joint income is under 124K.

Our mtg is 2400/mo and best case scenario rent would be 1975/mo. Are there really any benefits at tax time for renting this home? Or, should be try and sell it at a loss?

“We are moving out of state for a job and need to rent our home, as the market is saturated with homes preventing us from selling. I do not want to lose the tax advantages of having the primary residence write off, and am concerned about how this wil affect our taxes. We will be renting in our new community.”---> You can rent out your property and move back into it before selling it. As long as you live in your home for 2 years out of the last 5 years before you sell it IN GAIN, then you will STILL qualify for the personal residence exclusion up to $250,000 in profit without sharing with Uncle Sam($500,000 for MFJ; if both you and your spouse live there and are on title.).
“Our mtg is 2400/mo and best case scenario rent would be 1975/mo. Are there really any benefits at tax time for renting this home? Or, should be try and sell it at a loss?”---> Once you rent out your home or any part of it during the time you own it, even though you may not have to pay any capital gains taxes ( if you sell it at a loss as you said), you will STILL have to pay tax on the depreciation of the home;if you never depreciate the house while you rent it out, that'd be a big mistake ;you are subject to depreciation recapture, and you'll still have to pay tax on the depreciation you should have taken.So, you must claim depreciation as it is subject to recapture when you sell, whether you claim it or not while you hold the property as a rental. Recapture occurs on the sale of the property. The maximum amount of recapture is the amount of depreciation claimed or the amount that should have been claimed. That is, recapture occurs even on amounts that you failed to claim on the property. Recapture can be less if the selling price is less than the original cost of the property .In general, depreciation recapture is taxed at a maximum rate of 28 percent, but can be less, depending on your level of income. Depreciation is claimed in the year that it applies to only. As you can see, losses from selling a personal residence are not deductible. You can only claim tax losses for sales of property used for business or investment purposes. However, if you convert a personal residence into a rental property and then sell it for less than the original cost,I mean at a loss, then you will have a deductible loss; Maybe. The tax basis of the rental property is the lesser of the cost or the value when it is placed in service, plus any improvements, less any depreciation taken. So, if the house declined in value before converting it into a rental property you might not have a tax loss. However, a loss from a decline in value after conversion to a rental, is generally deductible as an ordinary loss, NOT LTCL.