Should I sell or hold my Bay Area townhome?

[Navjeet Singh]

Hi

I have a townhome in bay area with 70% equity currently valued at 1million.

I am considering relocating to Sacramento area to expand my family. I have enough savings to buy another property in Sac without selling the townhome.

I need advice on what should I do with my townhome - sell it and invest in another property/ market or hold and take tax depreciation - how does depreciation recapture work when I eventually sell it?

What would be ideal to minimize taxes? 

Note:
- it can rent for about $3500/month and leave me with $400-500 cash flow/month.

thanks!

[Joe Bertolino]

$400/mo on $700K in equity doesn't excite me.  I am also thinking Bay Area townhomes are going to stay fairly flat for awhile.  I don't see a crash but I also don't see a lot of upside in the next few years.  If it is me I 1031 into 5 new builds in Natomas, West Sac or Rancho Cordova.  You will get more monthly cash flow and be in a position to capture more upside IMO.