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I qualify for Harp. That's why I'm able to refinance through Quicken Loans for $3,500 closing costs for a 20 year REFI.4.25% or $3,800 for a 15 year 3.99% rate.
Time for an update. Basically I didn't refinance or do anything with this condo. I had it rented, but had to evict my tenant for not paying rent for 2 months. She still owes me and it's been over 6 months. Condo is still unrented, since I can't find anyone decent to rent it.
Green tree is going to refinance it now. 16 year loan for 4.75% interest, higher because its a underwater rental property. I think closing costs will be about $600. Currently owe under $90k, 6.875% interest rate and 21.7 years left.
Depending on your tax bracket, you could probably gain by renting and depreciating it until the value at the paper value is about what you can sell it for. I'm not a tax expert but I don't think you can recover that loss on your taxes unless you rent and depreciate OR hold the loss over until you make that much on a future house.
Depending on where you are, the price of that condo will come back sooner or later so even though you're taking a loss, it will eventually appreciate and you should recover from the loss.
Of course I don't know anything about OP's particular condo, but in general with condos, sometimes when owners (or prospective buyers) planning their costs treat the monthly condo fee as a fixed cost (one that will stay the same years into the future) and/or don't consider the possibility of additional costs in the form of a special assessment(s), they may find that they've underestimated future costs/possible losses (not always, but it certainly sometimes happens that escalating monthly fees and/or special assessments over time can change the math).
I have no opinion on whether OP should sell now or not, I just wanted to mention a possible factor to consider in calculating future cost.
Time for an update. Basically I didn't refinance or do anything with this condo. I had it rented, but had to evict my tenant for not paying rent for 2 months. She still owes me and it's been over 6 months. Condo is still unrented, since I can't find anyone decent to rent it.
Green tree is going to refinance it now. 16 year loan for 4.75% interest, higher because its a underwater rental property. I think closing costs will be about $600. Currently owe under $90k, 6.875% interest rate and 21.7 years left.
Quote:
Originally Posted by City__Datarer
Of course I don't know anything about OP's particular condo, but in general with condos, sometimes when owners (or prospective buyers) planning their costs treat the monthly condo fee as a fixed cost (one that will stay the same years into the future) and/or don't consider the possibility of additional costs in the form of a special assessment(s), they may find that they've underestimated future costs/possible losses (not always, but it certainly sometimes happens that escalating monthly fees and/or special assessments over time can change the math).
I have no opinion on whether OP should sell now or not, I just wanted to mention a possible factor to consider in calculating future cost.
Not sure refinancing and renting it is a good financial move for you.
What is the condo worth now? Anywhere close to $90K? Have you consulted with you tax accountant on the matter?
You have been subsidizing this condo for several years now and paying the full freight for 8 months. No telling when you'll get another steady tenant.
As noted above, condo developments age. Like all buildings things deteriorate and need to be replaced and repaired. Roofs leak. Siding rots. Foundations shift. Water mains and sewer lines break. ... Rarely do HOAs keep enough in reserve to cover these costs. So in addition to a hefty monthly fee, at some point you may be hit with an assessment, sometimes several in order to get things fixed up.
Meanwhile tenants are taking their toll on the inside of your condo.
Before refinancing and getting in any deeper, I would encourage you to consult a tax expert. What effect will the depreciation and other losses have in offsetting other income? What could you be doing with the money you are sinking into this condo that might have a better return on investment.
It could be that keeping the condo and toughing it out is the smart move.
It could be that $1K a month is a drop in the bucket to what you'll lose over the long term.
Depending on your tax bracket, you could probably gain by renting and depreciating it until the value at the paper value is about what you can sell it for. I'm not a tax expert but I don't think you can recover that loss on your taxes unless you rent and depreciate OR hold the loss over until you make that much on a future house.
Depending on where you are, the price of that condo will come back sooner or later so even though you're taking a loss, it will eventually appreciate and you should recover from the loss.
the depreciation is recaptured at sale at up to a 25% tax rate so it really wouldn't help. unless you die and pass the property on to heirs the depreciation is really just a case of the emporers new clothes.
Depending on your tax bracket, you could probably gain by renting and depreciating it until the value at the paper value is about what you can sell it for. I'm not a tax expert but I don't think you can recover that loss on your taxes unless you rent and depreciate OR hold the loss over until you make that much on a future house.
Depending on where you are, the price of that condo will come back sooner or later so even though you're taking a loss, it will eventually appreciate and you should recover from the loss.
Quote:
Originally Posted by mathjak107
the depreciation is recaptured at sale at up to a 25% tax rate so it really wouldn't help. unless you die and pass the property on to heirs the depreciation is really just a case of the emporers new clothes.
The recapture amount is only on those proceeds above the adjusted basis up to the amount depreciated. That amount is taxed as ordinary income up to a maximum of 25%.
Anything more than the adjusted basis + depreciated amount is subject to capital gains tax.
Tall Traveler suggested depreciating it down to the value of which it can be sold. He would get the benefit of depreciation now (tax deduction) and not have to recapture it as income when he sells because there will be no gain (in his example)
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