Potential Deal - Seeking Advice

[Marissa Nadeau]

Hey guys! I was hoping to get some of your thoughts and insights on a potential deal I am looking into. 

To give you some background, earlier this year, my husband and I got married and bought our first home in New York. It was a 3 bed, 1.5 bath appraised at $170k that we were able to get for $150k as it was for sale by owner and the owners were eager to sell. 

Our mortgage is about $1,200/mo, but as I research houses in our area, it looks like rents start at $2,200-$2,500/mo because of the school district. Since we don't have children yet, we would love to maximize our assets by renting this place out and moving to a home in the next town over. The house I am currently looking at there is a 3 bed/1 bath on the market for $175k. 

I am leaning towards doing an FHA loan this time around rather than a conventional mortgage to mitigate risk. If we went FHA, our monthly payment would be about $1,482/mo.

In listening to the BP podcast over the past year or so, I've heard Josh & Brandon talk a bit about the tax advantages of living in a home for 2 years out of the 5 years that you own it to avoid being hit with capital gains. Do you guys have any experience with these tax laws? 

Basically, I'm wondering if it would be better to hold out for another deal until we live in our current home until next February (the 2-year mark), or if these laws subject-to-change and not worth molding our investing plans to?

Greatly appreciate any insights that you have!

[Richard Jahnle]

@Marissa Nadeau - The exclusion you are referring to, called the home sales exclusion, only comes into effect if you are planning to sell your home, as capital gains comes into play if you make a profit on the sale of your home when it is considered an investment property. Your plan seems to be to rent out your current home if you move, as opposed to flipping your house now or in the next few years for profit. If I am assuming this correctly, I don't think the scenario you are laying out would apply to you. 

This article explains the Home Sales Exclusion in more detail:

https://www.thebalance.com/sale-of-your-home-3193496