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Hi, after reading some of the threads about tax consequences on a rental property I'm wondering if I should move back into my modest home again before I sell it.
I bought the home in 2006 and lived in it for 5 years - until 2011. I had to move out and rent it because I lost my job. I've been renting it out for 3 years now - the rent doesn't even cover my mortgage!!
Will I be better off, tax wise, if I move back into my home before I sell it? Based on what I've read it seems like this is the case but I'd like to hear some feed back. Does the fact that I lived in my home originally for 5 years help if I need to sell it while renters are in there?
I don't own any other homes - I've actually been living with my sister because the new job I found is a much lesser salary.
Hi, yes but it will be very small - I paid way too much for it when I bought it.
I lived there from 2009 through 2011 so if I sell this year, I won't have to pay taxes on the profit, correct? Do you mean capital gains tax?
I don't see being able to sell it this year and I'm still renting it. Would it be better to move back in and then wait a couple years to sell it at this point?
Hi, yes but it will be very small - I paid way too much for it when I bought it.
I lived there from 2009 through 2011 so if I sell this year, I won't have to pay taxes on the profit, correct? Do you mean capital gains tax?
I don't see being able to sell it this year and I'm still renting it. Would it be better to move back in and then wait a couple years to sell it at this point?
Thanks for your input!
If you move back into it you will end up paying some taxes on the CG when you sell. You have to decide for yourself if it is worth it. No one knows what the future holds. You'll probably want to sell before you have it a rental for 36 month. If you want a rental still, sell it and buy another rental unit. After you sell you'll contemplate what should I buy then realize it might be a bad investment and just keep your profit tax free.
You'll get less money selling your house with renters inside.
It has been a rental since February 2011 so it has been 36 months already.
I don't see selling it before the end of this year because the renters are still in it.
I never wanted to be in the real estate rental business - I just had to do it when I lost my job. I'm just concerned now about keeping it as a rental in case I have to sell it in the near future. It sounds like I will be paying more taxes to sell my rental home vs. if it is the home I'm living in.
I've never made enough in my rental income to even cover the mortgage - it's all pretty discouraging :-(
Hi, yes but it will be very small - I paid way too much for it when I bought it.
I lived there from 2009 through 2011 so if I sell this year, I won't have to pay taxes on the profit, correct? Do you mean capital gains tax?
I don't see being able to sell it this year and I'm still renting it. Would it be better to move back in and then wait a couple years to sell it at this point?
Thanks for your input!
Why don't you move back in and rent out a bedroom to a workoholic type professional. Extra income to cover the home?
Yes Suncc49 - I've thought about that as well - even though the house is just under 1,000 sq feet ;-)
I think even if I could sell it by the end of this year it will be too late to meet the 2 out of 5 year rule to avoid the taxes - from what I've read.
I guess the one good thing - also from what I've been reading - is that my income tax bracket is low so my long term capital gains tax will be lower as well. Please anyone tell me if this is incorrect!
Seems like moving back in is going to have to be the way to go!
Are you certain you will have a gain? You may have a loss. If so, from a tax standpoint you want it characterized as rental property rather than your personal residence.
Not sure how much profit it would be yet but certainly won't be what I had hoped for since I paid too much for it in the first place. I guess I should try to figure that out!
Thank you everyone for your responses - very appreciated!!
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