With new tax laws does keeping rental and /or buying new rentals make sense?
With new tax laws does keeping rental and /or buying new rentals make sense? There is no interest rate deduction as with two homes in most states would as up to > 1mil in mortgages.. there is no savings on Property taxes due to salt taxes limit.. So are you keeping your rentals.. are you couting on having multiple rentals as strategy? If so why?
Huh? If your extra home is a business you always can deduct its expensed.
In general the new tax law doesn’t make it it worse to own rental property, as others have alluded to. In terms of if it is worth it in general, it depends on if you are willing to do more work to deal with it, what your time horizon is, and your tax/financial situation. Back of the envelope: If you spend $100k to collect 1k a month in rent, you’ll be bringing in $12k a year on $100k of Capital. However, you’ll have time when your property isn’t occupied, needs repairs, etc. These things can easily add up to $4k - $6k a year on average. So figure you make $6k on $100k which is around 6% return on investment. And you’ll get other returns as well, because you hopefully have property appreciation and you can also deduct depreciation. Over a long enough horizon (10-20 years) real estate can beat investing in the stock market, but it’s a lot more effort and also riskier in the sense that short term it can cost a lot (imaging your roof needs to be replaced or a tenant trashed your place). So it comes down to your risk and effort appetite. I own some real estate but generally am hesitant to grow my real estate portfolio and want my more liquid investments and retirement accounts to be a significantly bigger chunk of my portfolio. But if you spend the effort and take the risk it can pay off.
The 1 million limit applies to primary residence not to investment property.
It does in low And medium COL areas where you can own the rentals outright for 30-100k (including rehab costs) and have 800-1200$ a month cash flow per rental. If you’re talking high COL then no. Also depends on your business structure and how you file taxes.
Is this a case of hypotheticals.. $800-1200 rent for a $100k investment?
800 on a 30k property or 1200 on a 100k property? Just curious, where do you guys find deals like these? New to the game so appreciate the advice.