is it "worth" it to keep a rental where you lose $400/month

[Anonymous]

I have been renting out a condo in Arlington where I lose $400/month. The value has gone up about 100K- however I would only clear about 25K after capital gains, realtor fees and paying off a HELOC. I can't refinance b/c it's an "investment" property.

Cons: I fear that I will have to put some money into it pretty soon since the appliances are all original (1997) and it needs some updating. I think it would take about 5 years to net zero on the property.

Pros: great for taxes and taking the loss but not sure it's worth it

thoughts?

[Anonymous]

Do your taxes and then do them without the condo for your own benefit. That should give you the answer.

[Anonymous]

Also why pay interest to get a deduction?

[Anonymous]

Are you sure you're actually taking the loss on your taxes? Most of those deductions phase out at $100,000 AGI.

[Anonymous]

Why can't you refi? We refinanced our investment property last year.

[Anonymous]

Anonymous wrote:I have been renting out a condo in Arlington where I lose $400/month. The value has gone up about 100K- however I would only clear about 25K after capital gains, realtor fees and paying off a HELOC. I can't refinance b/c it's an "investment" property.

Cons: I fear that I will have to put some money into it pretty soon since the appliances are all original (1997) and it needs some updating. I think it would take about 5 years to net zero on the property.

Pros: great for taxes and taking the loss but not sure it's worth it

thoughts?

Nothing personal, but this notion of the tax break being great drives me nuts - you only get the tax break because you are paying interest. The mortgage interest deduction helps people afford homes, it's not a tax benefit.

[Anonymous]

In the same boat but can't sell as its underwater. If I were you I'd sell and simplify.

[Anonymous]

Pp here. Plus 25k isn't chump change. Personally i would focus on your primary home and invest the 25 k or pay down other debt if you have it.

[Anonymous]

We are in a similar situation but would have to sell at a 25K loss. We are also phased out of the tax deduction. If we could break even or sell at 10K loss we would do it in a heart beat. 25k profit is a lot of money and we would kill to be in your situation!

[Anonymous]

Anonymous wrote:

Anonymous wrote:I have been renting out a condo in Arlington where I lose $400/month. The value has gone up about 100K- however I would only clear about 25K after capital gains, realtor fees and paying off a HELOC. I can't refinance b/c it's an "investment" property.

Cons: I fear that I will have to put some money into it pretty soon since the appliances are all original (1997) and it needs some updating. I think it would take about 5 years to net zero on the property.

Pros: great for taxes and taking the loss but not sure it's worth it

thoughts?

Nothing personal, but this notion of the tax break being great drives me nuts - you only get the tax break because you are paying interest. The mortgage interest deduction helps people afford homes, it's not a tax benefit.

That's not true. You get to deduct passive losses on real estate if your income is under $100k (and in part up to $150k). The loss on this home is likely to be more than just the mortgage interest, it will be the net loss of all the expenses of keeping this house, minus the rent received.

[Anonymous]

Yes, rental real estate has a lot of depreciation deductions, although you end up paying the tax in the end when you sell.

[Anonymous]

Wait, am I understanding this? You have a choice between a $25K gain and losing five grand a year for the foreseeable future? And you have to ask?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I have been renting out a condo in Arlington where I lose $400/month. The value has gone up about 100K- however I would only clear about 25K after capital gains, realtor fees and paying off a HELOC. I can't refinance b/c it's an "investment" property.

Cons: I fear that I will have to put some money into it pretty soon since the appliances are all original (1997) and it needs some updating. I think it would take about 5 years to net zero on the property.

Pros: great for taxes and taking the loss but not sure it's worth it

thoughts?

Nothing personal, but this notion of the tax break being great drives me nuts - you only get the tax break because you are paying interest. The mortgage interest deduction helps people afford homes, it's not a tax benefit.

That's not true. You get to deduct passive losses on real estate if your income is under $100k (and in part up to $150k). The loss on this home is likely to be more than just the mortgage interest, it will be the net loss of all the expenses of keeping this house, minus the rent received.

Yes, but you're still spending money and not getting it all back. It's a net loss. You don't get so something for nothing from the IRS.

[Anonymous]

How much principal do you add every month? If it is much more than $400 you may come out ahead keeping the condo.

[Anonymous]

Are you sure you can't refinance it? Costco Mortgage has some pretty sweet deals going on, and the calculator says the do investment properties.