[UTES]

Originally Posted by ScoopLV

You're freaking kidding me about people who hate it here, hate it because they're losers who can't make ends meet or find a job. That is ridiculous.

What's sauce for the goose is sauce for the gander.

Bill

[ScoopLV]

Originally Posted by lacrosse

After looking on redfin, zillow etc I am finding that houses are more expensive in Vegas than where I live outside of Dallas. I live in a nice neighborhood with a 4 BDR, 1and 1/2 bath, 2200 sq.ft price at $140,000 and having difficulty finding something in Vegas that is equal in a nice neighborhood.

1) It's you and two small dogs, yes? Why do you need four bedrooms?

2) When you say "in a nice neighborhood" -- do you really just mean Summerlin and Green Valley? Or are you actually open to the nice neighborhoods that dot the valley? Since schools don't matter, that opens up a great deal of the valley that isn't optimal for a family.


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And now that the finances are partially revealed, I STILL say it's a bad idea to rent -- but not because of capital gains taxes.

If you retire here, you're likely to be downsizing. Money sunk at this point means more and more downsizing. Every rent payment means a smaller house -- we'll see how things go after this month's market panic. But I still think house prices will go up a little -- we're still slightly below replacement cost. So the cash buyer today essentially gets free land and a small discount on the price of a house.

Make your scouting trip; see if you want to live here; and then be decisive and actually move here or don't. Half-assing it renting just means less house and worse neighborhoods in the future.

Renting for a year means appx. $12K you no longer have for a house in Las Vegas. Now instead of a $140K house, we're looking at a $128K house -- that requires a time machine in 2015. Or financing. And there's no way I'd finance a house for retirement. Not on a pension. No way, no how.

[ddrhazy]

Appreciation is holding steady at .5% monthly. You can wait to buy, but waiting a year means paying 6% more for the same house.

[MediocreButArrogant]

Originally Posted by ScoopLV

And now that the finances are partially revealed, I STILL say it's a bad idea to rent -- but not because of capital gains taxes.

What capital gains? The vast majority of people are going to be able to use the $250k/$500k exemption on their primary residence to avoid paying taxes on the gain. Only people who live in expensive areas where there's been rapid appreciation, or who have lived in their homes for many years will not have their gain covered by the exemption. It's not like the OP is selling a home he bought in Palo Alto in 2000. And there's no state income tax for individuals in Texas, so he doesn't need to worry about that either.

[StinkieMcCain]

Originally Posted by lacrosse

I'm 60 yrs old, no children, single, no need for a job, retired, receiving a monthly annuity check, have a health plan, 2 small dogs, love betting on sports(Vegas-where it's legal and receive payouts immediately) and have no strings attached. All I want to do is live a simple life without any stress(just retired from teaching 35 yrs of stress) hanging out in the sports books, traveling at least 6 times a year (conveniently with McCarran Airport close by is a plus). I know it's hot there but I'm use to it with the Dallas humidity that we have. Also, with the crime I plan to live in a fairly safe place unlike North or NE Vegas etc. Somebody please let me know why I shouldn't move out there. I feel right now that living in Texas has nothing to offer me.

Let me ALSO know why this gentlemen shouldnt move to Vegas?

[ddrhazy]

I believe 1031 exchange is for investment property and not for primary residence.

[BBMW]

I don't know if it's considered a 1031 exchange, but if you buy a new primary residence that is more expensive than your previous residence, you can roll your cap gain into the new property. But there's a rub in there. This won't work for someone who sold their expensive house in, say, LA and wants to buy a house in Vegas for less. If you buy for less you get hit for the cap gain.

Originally Posted by ddrhazy

I believe 1031 exchange is for investment property and not for primary residence.

[BBMW]

He never said he was a cash buyer. In point of fact, he wants to move here before he sells his Dallas house (or that's what it sounds like.) So his cash is still tied up in the other house. And, FWIW, if he move's here before he sells, and presumably rents, he can always retreat back to Dallas if Vegas doesn't work for him.

Also if he wants to move her under those circumstances, to buy, he likely has to take out a mortgage. So the mortgage cost and risk are back on the table. So is the mortgage interest. The after deduction portion of that is ever bit as much of a loss as rent.

The exchange only works if you buy a more expensive (or maybe the exact same price) house. If, as is often the case with people moving from CA, or the big eastern metro areas, people are coming specifically to down size (the cost of the house, but not necessarily the size or quality of the house), they have to take the cap gains hit. But if the first $250K (single) / $500K married of cap gain is excluded. Given what you can get for just $250K (never mind your initial investment + $250K, or the same + $500K for a married couple) in Vegas, the entire cap gain issue really goes away. So likely nothing to lose by renting there.

You ignore the issue of sunk transaction costs which are very much an issue.

Originally Posted by ScoopLV

How is the cash buyer going to go underwater? That's impossible.

The cash buyer could lose net worth. But isn't going to be on the hook for a mortgage. That's the point. There is likely to be significant capital gains. And renting for a year makes the 1031 exchange impossible.

Summing up. The cash buyer who holds off a year and rents instead of simply buying a house in a 1031 exchange:

1) Pays a year's rent.

2) Pays the full freight of capital gains tax following the sale of his or her primary residence.

3) Loses out on any equity from the purchase of the Las Vegas house. (But avoids the risk of another market crash, granted.)

4) Pays more for the house a year down the line provided housing prices go up. (But could pay less if the market crashes again, granted.)


Numbers one and two make renting a bad idea for prospective retirees -- providing this is a "sell one house and buy another" scenario.

[hotjambalaya]

Originally Posted by BBMW

This won't work for someone who sold their expensive house in, say, LA and wants to buy a house in Vegas for less. If you buy for less you get hit for the cap gain.

Is that even if you the house in LA is your primary residence?

[MediocreButArrogant]

Originally Posted by hotjambalaya

Is that even if you the house in LA is your primary residence?

If you're talking about a primary residence and not an investment property, you're probably going to use the exemption and not a 1031 exchange. A 1031 exchange is a TAX DEFERRAL strategy, not a TAX AVOIDANCE strategy. You're just putting off the time when you'll have to pay cap gains taxes. Taking the primary residence exemption actually AVOIDS paying of taxes on the gain. AVOIDING is better than DEFERRING.

Talk to a financial adviser if you aren't familiar with these. You don't want to be taking advice on something this important from anonymous online strangers.