Poll

What is my best financial move?

Take the capital gain hit and sell it (35k profit) and stay in my current home?
0 (0%)
Rent out new home for $800 a month and stay in my current home (This would cover both mortgages)?
2 (16.7%)
Sell my home I live in now to avoid capital gains tax at 160k minimum(100k profit) and be totally out of debt and move into the new home.
10 (83.3%)

Total Members Voted: 12

Author Topic: Sell, rent, or move in?  (Read 3316 times)

akajoe87

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Sell, rent, or move in?
« on: April 04, 2015, 06:31:46 AM »
This is what I am up against. I like to build homes for myself to avoid capital gains tax. But this is an odd opportunity Im up against. I owe 60k on my current home. The subdivision I live in was foreclosed on. The lots appraise for $25K but the bank is offering me a building lot for $2.5k if I get a construction loan through them. They are selling them at $15K to the public. Im going to build a home on the lot for 90K and it will appraise for 140K at the minimum. So after the home is built I dont know weather to take the capital gain hit and sell it (35k profit) and stay in my current home. Rent it out for $800 a month and stay in my current home (This would cover both mortgages). Or sell my home I live in now to avoid capital gains tax at 160k minimum(100k profit) and be totally out of debt and move into the new home.

akajoe87

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Re: Sell, rent, or move in?
« Reply #1 on: April 05, 2015, 05:30:08 PM »
Thanks for the votes so far! Could voters please give me a quick reason why they voted for what they did?

arebelspy

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Sell, rent, or move in?
« Reply #2 on: April 05, 2015, 05:35:39 PM »
I voted the third. It seemed obvious. Make a large tax free gain and move in debt free.  That's probably why it's (as of this writing 0-0-6). Can you make a case for one of the other options being better?

I'm guessing the vote count is so low, and here's no responses in thread because you gave us very little information beyond the barebones financial, nothing based on your needs or the property, or whatever.  But if you can sell your current home for more money, move in, and pocket the difference, and they're both equally satisfactory living conditions, why not sell the one worth more and invest it?
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akajoe87

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Re: Sell, rent, or move in?
« Reply #3 on: April 05, 2015, 05:42:11 PM »
They both will be identical living conditions. The other info I didnt release was that the economy is slow in my area and I may not be able to sell my current home before the new one is completed fast enough and have to rent out the new house or my home and move into the new one. So I guess my question is could I rent out my current house and move into the other until one sold or will that void the capital gain benefits?

arebelspy

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Re: Sell, rent, or move in?
« Reply #4 on: April 05, 2015, 05:47:01 PM »
Either one will be slow to sell, if they're in the same area, presumably (depending on the demand for new homes). Why would your current one sell for more?

Regardless, if you can sell the more expensive one (and it actually is worth more in selling in a compatible amount of time) and have the same quality of life and profit tax-free, that seems the obvious way to go.
I am a former teacher who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and am now settled with three kids.
If you want to know more about me, this Business Insider profile tells the story pretty well.
I (rarely) blog at AdventuringAlong.com. Check out the Now page to see what I'm up to currently.

akajoe87

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Re: Sell, rent, or move in?
« Reply #5 on: April 05, 2015, 05:52:24 PM »
Well I actually decided to make the new house as nice as mine now to give me the option to move in and be happy with it. Lets say I am paying for the new house and my current home for a year and my current home has not sold, should I consider renting it out then?

arebelspy

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Re: Sell, rent, or move in?
« Reply #6 on: April 05, 2015, 06:39:47 PM »
Well I actually decided to make the new house as nice as mine now to give me the option to move in and be happy with it. Lets say I am paying for the new house and my current home for a year and my current home has not sold, should I consider renting it out then?

If your house hasn't sold in a year, it's priced wrong.  And you should have adjusted way sooner than that.  :)
I am a former teacher who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and am now settled with three kids.
If you want to know more about me, this Business Insider profile tells the story pretty well.
I (rarely) blog at AdventuringAlong.com. Check out the Now page to see what I'm up to currently.

Bearded Man

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Re: Sell, rent, or move in?
« Reply #7 on: April 11, 2015, 09:47:51 AM »
I voted to rent the house out for the $800 a month since it covers both mortgages. Yes, you may still be in debt, but if the rental market is strong, that is what I would do since I could reinvest cash reserves into other things, and eventually, once the properties are paid off courtesy of your tenant, it's extra gravy.

bruce88

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Re: Sell, rent, or move in?
« Reply #8 on: April 13, 2015, 01:47:20 AM »
I voted to take the homeowner tax free cap. gains.

My wife and I are semi-retired and are currently buying and selling a house every two years.  Where else can you make that much money tax free?

We own rentals, but in your situation, the return on investment ($800 a month rent) seems poor for the work done and money spent.  As an example, one of our rentals pays $845 a month, yet we only have about $66k invested.

Consider taking your cap. gain and re-investing each 2 years in a new project.  (You can also re-invest some of your profits into IRA or SEP type retirement plans and also have deductions).

Can you buy more lots?  Maybe a dozen?  Sounds like a really, really good deal.

Let us know your choice!

akajoe87

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Re: Sell, rent, or move in?
« Reply #9 on: May 23, 2015, 07:19:58 PM »
I have decided to list my house I live in for sale and list the new house I am building for sale after it is complete. That way it gives me more flexibility when it comes to selling. I will have two houses for sale vs one. In the area I live in the market moves slow. And if either don't sell I am going to rent the new one out. Thanks for all the advise