Sell FCC Home or Wait a Year?

[Anonymous]

We moved out of our FCC home about a year ago (we bought a new home elsewhere in the DMV) and have rented it out. The lease is up July 1. We were going to sell in in July after the tenants move out. The tenants want to renew the lease for another year (they are great, pay like clockwork and only contact us for reasonable things). DH wants to lease it to them for another year. There is a 2.5% mortgage on it, paid pretty far down, so we are making good money doing this. I don't hate the idea of keeping some money invested in real estate given everything that is going on with the economy. However, I'm concerned that if we don't sell right away we will lose a lot of the value of the house if the DMV housing market slows to a crawl with all of the turmoil here. Added wrinkle -- there is about 250k of appreciation in the house, so, assuming the house doesn't lose all of that value, there will be a tax hit if we don't sell within 3 years of moving out (some appreciation in a primary residence is excluded from taxation upon sale, but it isn't a primary residence anymore for tax purposes once 3 years have gone by after you move out). So there is potential for a big tax hit. Final issue -- the reason we moved out was a bit personal and traumatic, and I don't even want to drive past the house again--my DH handles all repairs etc.; in my view this is another reason to just sell it.

It's in a highly desirable FCC location, walking distance to the WFC metro. It's at a desirable price point. But needs a ton of work (which we would not do -- it would be reflected in the price). At any rate, our realtor thinks it would sell easily in about 48 hours, even if the market is cooling right now.

I don't know what to do. There are so many factors to consider. I guess the good thing is that either way it isn't terrible; we sell and pocket the cash, or we hold onto it and keep it as a rental property and even if the value plummets holding onto it diversifies our assets and the mortgage on it is very low so we will easily make money renting it.

What do y'all say? Opinions welcome.

[Anonymous]

Sell now. The market won’t be strong next year given the job losses and economic concerns. Plus you will rid yourself of the traumatic connection.

[Anonymous]

Sell now.

Very little chance of market to get better in one year with recession and outsized job losses in DC area. Not only Fed, but contractors are getting fired in large numbers now. Effect of this will be visible in a year or so.

[Anonymous]

Anonymous wrote:We moved out of our FCC home about a year ago (we bought a new home elsewhere in the DMV) and have rented it out. The lease is up July 1. We were going to sell in in July after the tenants move out. The tenants want to renew the lease for another year (they are great, pay like clockwork and only contact us for reasonable things). DH wants to lease it to them for another year. There is a 2.5% mortgage on it, paid pretty far down, so we are making good money doing this. I don't hate the idea of keeping some money invested in real estate given everything that is going on with the economy. However, I'm concerned that if we don't sell right away we will lose a lot of the value of the house if the DMV housing market slows to a crawl with all of the turmoil here. Added wrinkle -- there is about 250k of appreciation in the house, so, assuming the house doesn't lose all of that value, there will be a tax hit if we don't sell within 3 years of moving out (some appreciation in a primary residence is excluded from taxation upon sale, but it isn't a primary residence anymore for tax purposes once 3 years have gone by after you move out). So there is potential for a big tax hit. Final issue -- the reason we moved out was a bit personal and traumatic, and I don't even want to drive past the house again--my DH handles all repairs etc.; in my view this is another reason to just sell it.

It's in a highly desirable FCC location, walking distance to the WFC metro. It's at a desirable price point. But needs a ton of work (which we would not do -- it would be reflected in the price). At any rate, our realtor thinks it would sell easily in about 48 hours, even if the market is cooling right now.

I don't know what to do. There are so many factors to consider. I guess the good thing is that either way it isn't terrible; we sell and pocket the cash, or we hold onto it and keep it as a rental property and even if the value plummets holding onto it diversifies our assets and the mortgage on it is very low so we will easily make money renting it.

What do y'all say? Opinions welcome.

I know your house. Sell it now

[Anonymous]

Sell now. It is only getting worse for the next few years.

[Anonymous]

Sell now or wait 4-5 years for economy to recover.

[Anonymous]

Between the current uncertainty, the capital gain exclusion, and the fact that you have a trauma response even thinking about this house, I say sell it and get it out of your life.

[Anonymous]

I would sell it no question. Mostly because of changing markets on the horizon. But absolutely because why do want to keep yourself tethered to something that has such horrible connotations for you?