Do I sell a healthy cashflowing SFH to pay off a new primary home? Seeking advice...

[Matthew McNeil]

I just built a new primary home for my wife and I. Monthly loan is $3500. I’m thinking about selling one of my debt free rentals to pay off the loan of the new house – thus erasing the $3500/month loan payment. Cashflow on the rental is $1400.

I realize that selling a cash flowing rental is open to criticism. However, I view it as either a) saving $3500/month for the new home or b) earning $1400/month cashflow from the rental.

The capital gains tax if I sell the rental will be $40,000. However, the money I’d save by not paying $3500/month mortgage is $42,000 after 12 months – thus recovering the money paid on the capital gains tax.

QUESTION: would you advise selling the rental to pay off the new home and take the $1400/month rental income loss (and gain $3500/month savings) or would you advise keeping the rental?

Thanks much!