General Landlording & Rental Properties
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Updated almost 5 years ago on . Most recent reply
Moving into a formerly tenant occupied unit
Northern NJ. Bergen county.
Hi all. Hope everyone is staying safe these days🍻.
One of my tenants moved out. Currently the building is a under a fixed 30 year investment property (residential) mortgage. Because it is an investment property the rate is a bit higher (25 basis pts).
If I were to take the unit, would I be able reclassify the mortgage ? I'm not really interested in a refi, tbh.
All feedback is welcomed.
Most Popular Reply
Usually no if its a locked rate. Consider what it will cost in refi and determine if its worth it . Rates are very low and it may be beneficial to do it
Usually no if its a locked rate. Consider what it will cost in refi and determine if its worth it . Rates are very low and it may be beneficial to do it
One side benefit on moving in could be having residency for 2 years out of the next 5. That could lower your capital gains when you go to sell.
I try to be buy and hold...not 1031 type really. But what do you mean by "next 5 years"?
If you were to reside in the property for 2 years, then in the next 5 years you could sell the property and not pay as much in capital gains tax because it was your primary residence. In that situation no need for a 1031 exchange.
I am also a buy and hold investor but at some point the equity held in that property will be better served allocated somewhere else.
@ Alex Cabej
FYI - you could do an owner seller and not have to go thru a bank.
or take the excess money out on the refi and invest that in another property.
that way you do not have to pay capital gains tax.
You have to refi. They don't reclassify mortgages or decrease your interest rate. If your rate is high enough now it would be worth it to refi.