Hi guys, We have made around $400k equity in our current home. Our plan is to relocate to India in next 3 months. Should we sell sell current home , take the $400k cash out. Our plan is to stay invested in bay area housing for long term prospects. So considering that goal, buy a new home within next 3 months. The whole thing came up when a friend suggested to do this swap, so we can get the 400k tax free and put that in 2nd home and give it on rent. It kind of made sense to me, but it's a lot of work and there are lots of moving pieces involved. Tc 200k
I don’t understand the “swap”
I mean sell the current home , get 400k tax free cash out. Buy a new home and use the money there
Its called a 1031 exchange
U get less house for same money that your first house is worth. Plus factor in realtor fees + loan processing fees, it will be much less than 400k. My advice is to rent out existing home, use the rent to pay off mortgage and retire when mortgage is paid in full
So the upside may not be much?
Yes. Assets have appreciated considerably. 900k buys you same home that you'd have bought 4 years ago. With new sale price your prop taxes also increase
I had to refi, currently I have a 4.125 fixed for 15 years, bit on higher side.
So much bad infomation in one post. 5 to 6% lol, 15 to 20% bellow. Rofl. Gtfo
Why would you not just rent the existing home? You want to get part of the cash out? If so, just get a heloc?
You likely lose up to 10% of value in this swap. 8% in fees and closing costs as a seller. 2% in fees and closing cost as a buyer All in you’re out 10% What you’re doing is actually pretty (tax) smart, but don’t forget that you can still keep that property for 3 more years as a rental after you no longer live in it and still get the tax free gain. Unless of course you think housing will plunge...
Yes I can do that, keep it for 3 more years, but I wont be able to maintain 2 mortgages.
Not trying to get all up in your biscuit, but, why won’t rent cover mortgage?
It’s funny how no one even questions this $400k capital gain. Hasn’t even sold the property but it’s money in the bank. OP let us know how much you clear (pre-costs) once you actually sell the property.
Missed it. It’s rare to see sensible posts like yours on blind. Thanks
CA will want a chunk of your riches.
Mind sharing the buy price and the year you bought?
If you cash out the money you make is tax free it 250k single or 500k couple. You may rent it out of you can make money over the expenses.
Not clear ?