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Rental Property Tax Benefits

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  • #16
    Originally posted by Larry Ragman View Post
    One slightly contrary opinion: I would not automatically dismiss keeping the house as a rental. I have two paid off units and there are advantages. But you just need to realize you are swimming upstream. If you sell within three years (maybe to your current tenants and avoid realtor fees?) you get up to $500k gain tax free. Hard to beat, but it can be somewhat matched by a 1031 exchange. Beyond that your $100 a month will not get you very far when you have your first major repair. And one of you either has to be available to take tenant calls or you need to pay a manager, etc. For that, you net $1200 a year? If you sold now let’s say you clear $300k. You can do what you want with it, but keeping it in real estate let’s say you joined the latest DLP equity fund, which might bring it 10% a year, or $30k, no hassle. Even the debt fund at 6% is $18k. Yes, the numbers on the house will look better in 7 years. But the house should also be worth more, and your cash out opportunity cost will be higher because you will have to recapture depreciation and pay capital gains on the net. I’d sell it and do the due diligence to find either a rental or a fund to invest in.
    Yeah, but the tax-free LTCG is money in hand! Hard to beat that. Unfortunately, very few RE investors truly, truly track their legitimate long-term returns - too time-consuming (and painful, in most cases).
    Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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