Rent or Sell?

[irvinehomeowner]

is it true that tax-free gain is only once per lifetime.  Thus, if you sell the second primary residence, you will NOT be qualified for the tax-free gain.

NVM.  found my answer
http://www.bankrate.com/finance/money-guides/home-sale-capital-gains-1.aspx

?Even better, there's no limit on the number of times you can use the home-sale exemption. In most cases, you can make tax-free profits of $250,000, or $500,000 depending on your filing status, every time you sell a home.?

So now you have no excuse to not sell your haunted mansion.

 

[eyephone]

is it true that tax-free gain is only once per lifetime.  Thus, if you sell the second primary residence, you will NOT be qualified for the tax-free gain.

Who told you this? It's not once per lifetime. You can use it once very two years, as long as you meet the requirements.

 

[eyephone]

is it true that tax-free gain is only once per lifetime.  Thus, if you sell the second primary residence, you will NOT be qualified for the tax-free gain.

NVM.  found my answer
http://www.bankrate.com/finance/money-guides/home-sale-capital-gains-1.aspx

?Even better, there's no limit on the number of times you can use the home-sale exemption. In most cases, you can make tax-free profits of $250,000, or $500,000 depending on your filing status, every time you sell a home.?

So now you have no excuse to not sell your haunted mansion.

He hasn't been there two years.

 

[Bullsback]

is it true that tax-free gain is only once per lifetime.  Thus, if you sell the second primary residence, you will NOT be qualified for the tax-free gain.

Who told you this? It's not once per lifetime. You can use it once very two years, as long as you meet the requirements.

I think he is confusing the every 2 years capital gain benefit (250 / 500K) with the one time ability to transfer your property tax basis to a new property (a lot of exclusions, etc, here though). 

 

[yaliu07]

This is my old house.  It is NOT next to cemetery.    it is around rowland height/diamond bar area where food are great.

I currently rent out the place and i have positive cash flow.  i dont know if i want to sell it or keep renting out.

 

[Bullsback]

This is my old house.  It is NOT next to cemetery.    it is around rowland height/diamond bar area where food are great.

I currently rent out the place and i have positive cash flow.  i dont know if i want to sell it or keep renting out.

As long as you lived in for 2 of the past 5 years, you should be fine to tax the benefit (and it is not a one time use benefit). 

 

[eyephone]

This is my old house.  It is NOT next to cemetery.    it is around rowland height/diamond bar area where food are great.

I currently rent out the place and i have positive cash flow.  i dont know if i want to sell it or keep renting out.

You should keep it since it's positive cash flow.

 

[eatthis]

I currently rent out the place and i have positive cash flow.  i dont know if i want to sell it or keep renting out.

The question is what is your rate of return considering how much you have tied up in the property. I'd venture to guess if it's cash flow positive you probably have quite a bit of equity. Could you better invest that same money elsewhere and get better return, and/or possibly less hassle. If you have low renter turnover then it might still make sense. Otherwise, every time someone moves out more investment is needed to repair any normal wear or tear even in the best case, which is always a lot more than you'd think.

 

[yaliu07]

I currently rent out the place and i have positive cash flow.  i dont know if i want to sell it or keep renting out.

The question is what is your rate of return considering how much you have tied up in the property. I'd venture to guess if it's cash flow positive you probably have quite a bit of equity. Could you better invest that same money elsewhere and get better return, and/or possibly less hassle. If you have low renter turnover then it might still make sense. Otherwise, every time someone moves out more investment is needed to repair any normal wear or tear even in the best case, which is always a lot more than you'd think.

i will get a positive equity back.  Currently, think invest that money in mutual fund.  is there any other better investment?

 

[meccos12]

I currently rent out the place and i have positive cash flow.  i dont know if i want to sell it or keep renting out.

The question is what is your rate of return considering how much you have tied up in the property. I'd venture to guess if it's cash flow positive you probably have quite a bit of equity. Could you better invest that same money elsewhere and get better return, and/or possibly less hassle. If you have low renter turnover then it might still make sense. Otherwise, every time someone moves out more investment is needed to repair any normal wear or tear even in the best case, which is always a lot more than you'd think.

i will get a positive equity back.  Currently, think invest that money in mutual fund.  is there any other better investment?

in my opinion the best investment in the last two years were dumping money into index funds or buying collectible cars... 

 

[usctrojancpa]

I currently rent out the place and i have positive cash flow.  i dont know if i want to sell it or keep renting out.

The question is what is your rate of return considering how much you have tied up in the property. I'd venture to guess if it's cash flow positive you probably have quite a bit of equity. Could you better invest that same money elsewhere and get better return, and/or possibly less hassle. If you have low renter turnover then it might still make sense. Otherwise, every time someone moves out more investment is needed to repair any normal wear or tear even in the best case, which is always a lot more than you'd think.

i will get a positive equity back.  Currently, think invest that money in mutual fund.  is there any other better investment?

in my opinion the best investment in the last two years were dumping money into index funds or buying collectible cars... 

Yup....like the 997 GT3 RS 4.0 or the Porsche CGT.

 

[usctrojancpa]

I currently rent out the place and i have positive cash flow.  i dont know if i want to sell it or keep renting out.

The question is what is your rate of return considering how much you have tied up in the property. I'd venture to guess if it's cash flow positive you probably have quite a bit of equity. Could you better invest that same money elsewhere and get better return, and/or possibly less hassle. If you have low renter turnover then it might still make sense. Otherwise, every time someone moves out more investment is needed to repair any normal wear or tear even in the best case, which is always a lot more than you'd think.

i will get a positive equity back.  Currently, think invest that money in mutual fund.  is there any other better investment?

I make 50% per year trading options...just gotta have the capital to play around in those waters.

 

[AW]

As there are more options to buy with Tustin/GP, renting existing place sounds tempting, so to recap

Assuming there is equity on the property and potential rent will be cash flow break even

Pros/Benefits would be renter paying equity (principal portion of amort table), tax deduction on the building depreciation (amort at 27.5 year), deduction on expenses and improvements, if needed and equity available, can take out heloc, also tax deductible

Cons would be the tax deduction on the building need to be paid back when selling it @ 25% rate, vacancy, repairs, maintenance, potential bad tenants, not able to pay rent/squat, tenant friendly laws in calif, cap rate not appealing to investors

And the only way to not pay back the building depreciation is either find another rental equal or larger in size, or not sell ever, beneficiary will inherit without capital tax gain and building depreciation will reset?

 

[Bullsback]

As there are more options to buy with Tustin/GP, renting existing place sounds tempting, so to recap

Assuming there is equity on the property and potential rent will be cash flow break even

Pros/Benefits would be renter paying equity (principal portion of amort table), tax deduction on the building depreciation (amort at 27.5 year), deduction on expenses and improvements, if needed and equity available, can take out heloc, also tax deductible

Cons would be the tax deduction on the building need to be paid back when selling it @ 25% rate, vacancy, repairs, maintenance, potential bad tenants, not able to pay rent/squat, tenant friendly laws in calif, cap rate not appealing to investors

And the only way to not pay back the building depreciation is either find another rental equal or larger in size, or not sell ever, beneficiary will inherit without capital tax gain and building depreciation will reset?

Or move back in and make it a personal residence for 2 years and then sell. 

 

[AW]

I could've sworn that there was some bill passed by congress to address this specific situation where people were avoiding the depreciation recapture, but if the 2 of 5 year rule applies then it's all gravy  ;D

 

[Bullsback]

I could've sworn that there was some bill passed by congress to address this specific situation where people were avoiding the depreciation recapture, but if the 2 of 5 year rule applies then it's all gravy  ;D

You might be right about that. 

 

[AW]

Well then, that's some Debbie downer...
Guess if I do go this route it'll be equal or larger size somewhere around Florida. 

 

[AW]

and just researched, another caveat, if your modified AGI is high, then the tax benefits wouldn't really apply...
exception is if you're a realtor of at least 51% the time and 750 hours

 

[Bullsback]

and just researched, another caveat, if your modified AGI is high, then the tax benefits wouldn't really apply...
exception is if you're a realtor of at least 51% the time and 750 hours

I think all of the losses that you can't take are something you get to take advantage of to reduce the taxable gains when you sell the asset. 

 

[usctrojancpa]

and just researched, another caveat, if your modified AGI is high, then the tax benefits wouldn't really apply...
exception is if you're a realtor of at least 51% the time and 750 hours

I think all of the losses that you can't take are something you get to take advantage of to reduce the taxable gains when you sell the asset. 

That's correct, the unrealized losses (due to AGI active real estate loss limitations) are carried forward and add to the basis of the home when calculating the gain/loss upon sale.