My house by is worth roughly $385,000 i owe $233,000 on the loan. I bought the house in March, 2015. So if i were to sell the property today then my capital gain would be roughly $152,000. I lived in this house as my primary residence for 18 months which makes me eligible for a pro-rated homestead exemption however, that might not matter - i will explain.
I have not worked at all this year and i expect to make less than $39,375 between now and the end of the calendar year, my long term capital gains tax rate is 0% for 2019 (see https://www.nerdwallet.com/blog/taxes/capital-gains-tax-rates/). So as far as I can assume the homestead exemption is moot here and takes a backseat to the fact that I have a net 0% capital gains tax status for 2019.
The question is, do i keep my property and take advantage of my capital gain tax status since i am unemployed, or hold onto. I have made a couple of compounded interest scenarios. Assumptions are that any other year i will be working, i fall into the 15% capital gains tax bracket a well as a 5% compounded interested increase YoY. (On average, my current home's value has increased on average 8% YoY from the time i purchased it until now.)
Scenario 1: Hold on for 5 years
Estimated 5 year value: $494,000
Estimated loan amount: $209,000
Estimated taxable gain: $42,750
Estimated net profit: $242,250
Scenario 2: Hold on for 20 years
Estimated 20 year value: $1,044,366
Estimated loan amount: $137,000
Estimated taxable gain: $136,050
Estimated net profit: $770,950
Obviously there are assumptions made here. Property value increase YoY, the Feds will not change the capital gains rates in consumers favor (not likely), etc.
I could of coarse do a 1031 exchange later on in the future, but as i'm sure you know, the tax penalties are only deferred and they catch up to you the day you go to cash out eventually.
Seems like an obvious one. But still would rather have a collective opinion. What are your thoughts?
