Should we sell or rent after property is rehabbed?

[Grace P.]

Purchased a house with HELOC for $192k. Rented it for 6 mos now we are in the middle of the rehab. Once the rehabbed we can rent it for $1950. Keep for 2 years and then sell using 1031 exchange to avoid Capital Gains. Or we can sell it now for about $350k and pay the higher taxes. If I am understanding correctly if we sell it now profits would probably be considered ordinary income but we could directly deduct all the rehabbing. If we sell later taxes are lower but a lot of the improvements would have to be depreciated and paid back once sold. We are looking at about $130k gain. Any thoughts/suggestions are appreciated. Thanks!

[Theresa Harris]

@Grace P.  Determine how much are the monthly expenses compared to the rent.  Using the 2 year plan, figure out how much you'd walk away with if you sold it now vs rented it for 2 years.  Don't forget to include equity in the home and, as you mentioned, the taxes.