Next moves — many options

[Kady DeWeese]

I have a house I bought all cash for 310k last summer in the Austin area I was going to use as my primary residence but ended up really disliking the neighborhood/house after 9 months and decided to move and use it as a rental.

Took out a loan and got a new home a few miles away, planned to use the all cash home for a rental as we’re in a hot rental market currently as I mentioned. My only hang up with renting this place is property tax would be 50% of the rental income... I want to sell a buy possibly a few other properties. Namely, I eventually want to purchase a condo or townhouse in a ski resort area in Colorado and rent it out most of the year minus a few weeks a year to escape summer weather where I live and use for a few weeks a year during ski season. I have cash for a down payment for this goal outside of selling the all cash Texas home but monthly payments would be tight if it didn’t rent regularly.

I’m wondering what are my opportunities with the all cash home. Should I sell it and purchase a few properties to get good cash flow? I am up in the air about renting it or selling it outright and using the funds to buy a few properties, including the ski resort condo with loans.

I know I may be subject to capital gains if I made a profit on the home I paid cash for, but what if I don’t make a huge profit on the sale? Not subject to the tax then. I don’t think I would. 

I wonder what options you all know about or can easily spot in this situation that make sense.

[Jim Cummings]

@Kady DeWeese. You wouldn't qualify for the normal Homeowner tax exclusion since you didn't live in the home for 2 years and certainly don't meet the moved for job requirements of the tax code.

Your best option IMO would be to do a 1031 Exchange Sale in which you sell the property  and buy other investment property. You Exchange one property for another (can be more than one). You just have to reinvest all of the proceeds from the Sale of the Austin Rental in other investment property(s). This could be commercial, Residential, Land, among other investment property types. 

There are a number of specific rules you need to follow to utilize a 1031 Excnhange. Do you basic homework online and then decide if this is the best avenue for you. Several folks on BP are qualified 1031 Exchangors, or you can probably get a referral from your favorite title company in Austin. DM me off list and I can give you a company I've used and was happy with.