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[quote=Anonymous]My boyfriend will be moving in with me soon and we’re debating whether to rent out or sell his townhouse.  He paid $250k for it as a divorce buyout and his mortgage balance is about $200k.  His payment is around $1300/month all inclusive (PITA).  It’s worth about $500k at this point but probably won’t got much higher.  We’re not sure what the best financial decision would be regarding keeping it or renting it.

Rental income would be around $2k per month or maybe a bit more.  He’s handy so he can fix anything that breaks.  If we go this route he’d use the extra income to pay down the mortgage with the hope of having the house paid off by retirement in about 11 years.  The main downside I see to this plan is the tax burden when he sells.  He’ll lose his primary residence deduction, would have to depreciate then recapture at the sale and would have to pay capital gains.  But on the flip side if he still owns the townhouse when his kids get out of college (if they decide to return to the area) they could always rent it from him or he could just let them live there and pay expenses.

The other option is to sell the townhouse and invest the proceeds.  Market is so awful now that I’d be hesitant to do that but again this is money that wouldn’t be touched until retirement so it has time to grow.

Is there something else I haven’t thought of regarding pros and cons of either choice?[/quote]

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