Sell our house or rent it out? Relocating to Bay from LA
We have a house in a good zip code in LA and have lived there for a little under 2 years. Just got an offer up in the valley and am just wondering if we should get rid of the house pay taxes and rent up there? The other option is we keep the house and rent it out. We’d be about $500 upside down from our mortgage payment so we’d pay that in addition to rent in SF and I guess paying more in taxes? I think we can sell pretty quickly since we’re in a 10 out of 10 school district but I also don’t want to lose equity and get taxed on capital gains if we don’t buy in SFB right away? Thx!
Keep the house
Yeah that’s what I’m thinking the $500 + property tax + income tax is probably better than capital gains by selling and keeping $200k equity?
Never sell real estate but rent for at least your mortgage if not a lot more.
This is bad advice. Realestate is historically not a great investment compared to stock market and a lot of stress being a remote landlord.
Just need real estate to return 1% a year. Everything else is gravy. Landlording is great but you can outsource if you get stressed collecting checks. Heading I to my 3rd decade of only buying.
It rents for its market value, not what makes the owner’s books work out. Beware that California is landlord hostile. Look into insurance against non-payment. You can’t evict someone who declares bankruptcy on you. Check the rent control policy where your house is.
OP, if you have significant appreciation in the house (but less than 250k if you’re single, or 500k if married) and have been living there for the past 2 years, then you should sell the house. You have the absolute best tax exclusion at your fingertips and if you rent it for 3 years, then you lose that exclusion. To skip on the opportunity to capture hundreds of thousands in appreciation tax-free would be ludicrous in most cases. Take the money out tax free and redeploy it into something else that gives you a better return. But don’t lose the biggest tax break of your life just to hold on to something that will still COST you at least $500 per month. And by the way there are more expenses than just the mortgage. Maintenance, turnover, and property management will add significantly to that number.
Okay thanks! I’ll ask our accountant. I’d always thought that we’d owe a lot of tax unless we flip the proceeds into another house? Or are you saying buy in the Bay for that tax exclusion? My wife’s real stubborn so I need evidence to back this up ;)
No, you’re referring to a 1031 exchange and that only applies for rental properties. Your primary residence is tax protected within those limits. https://www.nolo.com/legal-encyclopedia/avoid-capital-gains-tax-selling-home-29901.html You can buy a Ferrari if you want, though your accountant certainly wouldn’t approve.
Thanks what I meant was that this house was our first time home buying experience. Would love to be connected we do have a resale estate agent we worked with to buy the place already: is a broker different than an agent? Thx?
oh gotcha I misunderstood that, feel free to PM me for some info that will help you
Lol
Rent it out for whatever your mortgage is. I wouldn't rent it out for less
Def keep the house. LA will always be a desirable place to live and more and more parts are improving
Yeah we’re in an immediate suburb (Arcadia) too so I’m on fence it seems like a great long term investment.
Refinance to an interest only mortgage, rent it out and use the remaining cash flow for your taxes.
Why would you rent for anything less than your mortgage?
I’m intending to list it for my mortgage but Zillow estimates are saying I could only rent it out for $500 less than our mortgage worse case scenario...no experience here I’m not a slumlord ;) first time home buyer.
Get a realtor, one that also does property management and see what they think