Reply to Trading 2 for 1

Forum Index » Real Estate

Reply to "Trading 2 for 1"

Subject:

Emoticons





More smilies

Text Color: Font: Close Marks

[quote=Anonymous][quote=Anonymous]My husband and I both owned homes when we met. We moved into my house when we got married because it was bigger, and we started our family here.

We’ve been renting his place out for a small amount of profit.

Recently, a house went up for sale in the neighborhood where we live currently, and I completely fell in love with it.

The math basically works out that it would be an even trade to sell both of our houses and by this new one.

To be clear, we don’t need to sell both houses to afford the new one. I just mean that it would basically be a financial wash for us to exchange two homes for this one home. Our mortgage payment would be basically the same etc.

Other than financial, is there anything I’m not thinking about here? I’m a very practical, conservative person, and I just want to make sure I’m thinking about this in the right way.

[/quote]

If your homes appreciated in price and his home was rented for many years, then you will own a lot more taxes on his property because it's a rental.  When you sell yours, then you will get 500K capital gains tax free.  He will have to pay recaptured depreciation and full cap gains on the diff in price.  If his home is paid off, don't expect to keep most of what it will sell for.  You have to use some calculators to figure out how much he can cash out.  Rental property sales carry this extra loss you have to account for if you are trying to cash out.  To avoid paying all these taxes you have to do 1031 conversion buying another rental property.  But then you have to remain in landlord business, which isn't your goal. Just do the math.[/quote]

Options

	Disable HTML in this message
	Disable BB Code in this message
	Disable smilies in this message

Review message

Search Recent Topics Hottest Topics