To Sell or Not to Sell - Las Vegas SFR

[Ryan McDonald]

Long story short, I have $200k equity in a property that might be better utilized.

I purchased my first primary residence in Las Vegas in 2009 and lived there until I build a new townhome and moved out in fall of 2020. I've refinanced a few times and have a HELOC but still looking at $200k plus equity.

Estimated Value: $420,000 Exact floor plan sold at that price but I have new floors and appliances and better backyard.

Loans:

$149k @ 4.25%. 30 year fixed with 27 years left. Payment if $1,060 per month including taxes and insurance in escrow.

$50k HELOC @ 4.5%. Still in draw period with $10k available. Draw date ends 2028. Used to improve property. $300 current minimum payment.

I’m figuring I could net close to $200k after fees and commissions.

Here’s my dilemmas:

- it was my primary residence until 2020. Based on tax laws I have about 4 more years left of qualifying for the $250k primary residence profit tax exemption (lived there 2 of past 5 years). I have no interested in doing a 1041 exchange and no interest in paying taxes on $200k profiting 24% bracket. I could move back into the house though not ideal.

- I’m currently renting it as a higher end, monthly short term rental with 95% occupancy and netting $15k+ PROFIT on an annual rate. Had some higher start up/op expenses this year. It’s a great return on initial investment but there is opportunity costs now.

- Vegas real estate market is hot. I could list and get multiple offers quickly. I’m not surely this will last much longer which could make it harder to sell in future. Appreciation is 10%+ right now. I also don’t want to miss out on future gains.

-I’d like to use equity to purchase additional investment properties in Vegas and out of state or use a portion for another primary residence and turn townhome into traditional rental.

What would you do in this situation? I feel like I need to sell regardless in 4 years to avoid a tax bill on profits.

Potential options:

- cash out refi and use $100k for other investment. Let it ride as Airbnb and sell in 4 years.

- "sell" to LLC and get investment property loan, continue to operate as Airbnb. Clear debt from my personal books. Not sure if this allows me to take gains without tax liability.

- sell now and miss potential future appreciation

Any input is appreciated!