NEW YORK (MainStreet) – With its astronomical home prices and high percentage of renters, Manhattan isn’t exactly representative of the national home market. Still, homeowners elsewhere might get some inspiration from a recent New York Times story on homeowners with a slick way to profit from today’s oddball housing market: renting out their high-end home for a premium and moving into a less expensive apartment, profiting on the difference.

Would that work elsewhere?

It could work in certain cases, especially for empty nesters and retirees ready to downsize. Because you’d sign a lease for only a year or two, you might be willing to save by renting a place that’s a little cramped, or in a neighborhood that’s less than ideal.

But unless there is a dramatic difference in the value of the home you vacate and the apartment you rent, it will take some sharp calculations to be sure the maneuver will pay off. The scheme isn’t likely to work if you’re intent on maintaining your old lifestyle in the new place.

In Manhattan, rents have soared because there’s been little construction in recent years, and because many people prefer renting to buying in today’s volatile market. Meanwhile, home prices have slumped, so that homeowners who want to cash in are either reluctant to sell or cannot get enough to pay off their mortgage.

Rising rents and falling home prices are common around the country, but in most markets the disparity is not as exaggerated as in Manhattan. The New York Times cited a couple with two children who are renting out the family’s 3,000-square-foot loft in SoHo for $12,500 a month, while moving to a 1,000-square-foot apartment in the West Village for $4,200 a month. With the savings, the husband hopes to start a business.

But in a less extreme market, it might be pretty hard to find an acceptable apartment for one-third the rent generated by the primary home. And even if the numbers appear promising at first glance, there would need to be a big margin for error.

The damage deposit you charge your tenants, for example, might not be enough to cover repairs and repainting after they leave. Also, to be safe you should expect to go without rent for a month or two while you spruce up between tenants. Of course, if the tenants stop paying and refuse to move out, it could take months to get sheriff’s deputies to haul them out by force, and you might never recover the loss. Before renting your place, study the local tenants’ rights laws for obstacles to evictions.

On the bright side, most expenses incurred for renting out a home are tax deductible, including mortgage insurance, homeowner’s insurance, advertising, property management costs and repairs. On the other hand, none of your apartment rental costs will be deductible.

Note that if you eventually sell your home, you could face capital gains tax on any profits, which are the sales proceeds less the original purchase price and costs of major improvements.

To avoid capital gains tax, you must have owned and lived in your home for at least 24 months. Those months need not be consecutive, but must have occurred within the five years prior to the sale. If you rent the home out for a number of years, you may have to move back to avoid a gains tax.

Renting out a property can be profitable, but many homeowners regret it anyway because of the headaches, like tenants’ complaints as you’re sitting down to dinner. If the rent received does not exceed the rent paid on the apartment by a significant margin, the maneuver might not be worth the trouble.

The ideal candidates, then, are homeowners who also have non-financial reasons for moving out but keeping the home, like retirees who don’t want to sell in a down market but are eager to get on with their new lives.

If you're trying to figure out whether it's better for you to rent or buy a place to live, check out MainStreet's look at Renting Post-Recession: What You Should Know!