Renting Out Your Minnesota Home Instead of Selling It
Program and regulatory figures verified September 25, 2026. Details change; confirm your scenario with us.
In a state that taxes both recording a mortgage and recording a deed, the structure that records the fewest of each has a measurable advantage.
What it avoids
Minnesota reaches a move-up from two directions. The mortgage registry tax applies at 0.0023 of the debt secured whenever a mortgage is recorded, with the Department of Revenue placing liability on the borrower, and Hennepin and Ramsey adding 0.0001. The deed tax applies at 0.0033 of net consideration when a deed is recorded on a sale.
Keeping the departing home records one mortgage, on the new house, and no deed at all. So the registry tax applies once and the deed tax does not apply. Against the alternative of borrowing against the departing home and then selling it, that is two fewer taxable recordings.
Detail on the mortgage registry tax page and the deed tax page.
What it costs
The proceeds. No sale means nothing to retire a bridge loan with, nothing to pay off a second mortgage, and nothing to apply as a principal reduction on a recast.
The file has to work on income and reserves alone, with the departing home's payment either offset by rent or carried outright. Saving a few thousand in recording taxes does not compensate for a structure that does not qualify.
The lease will not help your loan
Fannie Mae Selling Guide B3-3.8-05, dated 09/02/2026 under Announcement SEL-2026-08, ends its documentation section with a flat statement: lease agreements are not permitted for any departing residence.
Acceptable evidence of monthly gross rent is a complete appraisal report that includes market rents; a Single-Family Comparable Rent Schedule, Form 1007, for the occupied unit; or market analysis tools such as Zillow, Redfin or the MLS using at least three comparable rental properties from the same market area, including subdivision or project where possible. The lender must also document a current housing payment first.
What the income is worth
Adjusted net rental income is monthly gross rent times 75%, then minus the departing residence's PITIA. Positive, and it offsets that property's PITIA and stops there. Negative, and the shortfall is added to your debt-to-income ratio.
The best available outcome is that the old house stops counting against you.
Reserves and the 12-month line
B3-3.8-05 requires six months of reserves covering the vacated property's PITIA when the borrower has less than 12 months of property management experience, in addition to reserves required for multiple financed properties.
If the departing home has more than one unit
The lender obtains the most recent year of individual federal income tax returns, IRS Form 1040, to support rental income received for tenant-occupied units. Those units follow the non-subject-property guidance, and the vacancy factor applies only to the unit the borrower occupied.
Compare the routes on the structures page, or start from the Minnesota guide.
Frequently asked questions
Does renting out my Minnesota home avoid the deed tax?
Yes. The deed tax at 0.0033 of net consideration applies on recording a deed, and keeping the departing home records none. It also means the mortgage registry tax applies only once, on the purchase money mortgage for the new home.
What do I give up by renting instead of selling in Minnesota?
The proceeds. With no sale there is nothing to retire a bridge loan, pay off a second mortgage, or apply as a principal reduction to fund a recast, so the file has to stand on income, the rental offset and reserves.
Can I use a signed lease to document rent on the Minnesota home I am leaving?
No. Fannie Mae Selling Guide B3-3.8-05, dated 09/02/2026, states that lease agreements are not permitted for any departing residence. Use a complete appraisal including market rents, a Form 1007 rent schedule, or market analysis tools with at least three comparable rentals.
How many months of reserves will a first-time landlord need in Minnesota?
Six months of reserves covering the vacated property's PITIA, because that applies when the borrower has less than 12 months of property management experience, in addition to any reserves required for multiple financed properties.
Mike Certo · NMLS #260555 · Cornerstone First Mortgage NMLS #173855 · Equal Housing Lender. Educational content about financing, not a loan commitment and not legal, tax, or real estate advice. Minnesota mortgage registry tax and deed tax are administered by the Minnesota Department of Revenue and exemptions depend on your facts; your closing agent, your CPA or a Minnesota attorney, and your real estate agent each handle their own part. Loans are subject to borrower and property qualification.