To sell or not to sell...that is the question!

[Angelica Wurth]

Hi,

What would you do? I purchase a SFR (in El Dorado AR) paid cash and am finishing up reno that I also paid cash for. I planned on flipping it but given the market, would it be best to cash out and rent? I'm in about $100K spend; could sell for $170K or rent (potentially) for $1300. What would you do, best strategy for this home? Thank you in advance!

[Henry Clark]

Run your numbers.  
1.  Income Tax at 38% ordinary income if you sell within 1 year

2.  Income tax at 20% capital gain if you sell after 1 year

3.  No tax if you live in as primary residence for 2 years

4.  Sell with owner financing. Have them pay x down. Gets some cash out.  Leaves capital tied up. 

5.  Rent.   Then refi at 65% of the $170,000 appraisal.   Then do next project.

Compare to your objectives.