Is there anyone out there who is patient and kind who will be able to help walk me through the impact of rental income on overall income and FIRE?
The general plan is to FIRE in 2020 and move from one very cold high cost of living area to a very hot high cost of living area. My husband (because he loves his job) will likely continue to make a some money working after 2020. Currently, our spending is high and this is in part due to the high cost of housing in our area. Obviously, lowering our expenses is a goal to increase savings now, but post FIRE needing less income would allow us to take advantage of healthcare subsidies and a favorable long term capital gains rate as we liquidated assets, right?
Presently, we have a big, fat mortgage. Given the low rate, it seems to make sense to keep it for now and invest our money in stock funds. But, when we FIRE, would it make sense to pay it off and decrease our annual spending? We could sell the house, and may in the future, but want to be absolutely sure tropical island life is for us before we go through the hassle and expense of a full move.
If we were to pay off our mortgage in our present location and decide to move or travel for an extended period of time and rent out our house, would that rental income potentially impact our gross income for tax purposes?
I know we have a few years left to figure things out, but it seems like something we should be planning for now.
I'm hungry for knowledge about rental incomes from VRBO style temporary rentals, long term rentals, income, and taxes. But, need it broken down into nice little bits. "FIREing with an expensivish home for dummies" is about my speed.