All Forum Posts by: Jimmie Dickey

First, thank you all for taking the time to answer the questions that come up on here. I know some are repetitive. We may be relocating soon and I don't want to be in this rental market from a couple hundred miles away. I'm trying to plan whether I'd be better off selling a rental property now, or waiting a little longer as far as tax calculations go....We've got a lease, but we've also got provisions to get out should we decide to sell. And I know I need an accountant, but I'm going to wait a month or so until tax season dies down...using round numbers for the sake of simplicity, but these are very, very close. Very minimal improvements. 

May 2008: Purchased as primary residence for $155,000 (116,000 house, 39,000 land)

July 1, 2014: Went into service as rental, depreciation begins

Depreciation taken so far: $6,773 and growing by 315.08/month

Market Value today: 160,000 (120,000 house, 40,000 land)

I'm calculating it in a way that makes no logical sense to me. 

So...what would you calculate my basis as given the above info? 

What would be my actual gain?

@Phillip Y. The Harmon duplexes. 

X2 on what Eugene said. The City of Auburn has actually begun a moratorium on any new projects due to the incredibly flooded market. The University itself has really expanded and upgraded on-campus housing in addition to larger developers coming in and building just a ridiculous amount. There is a section a mile or so away from campus that was the best thing going 10 years ago.....now however, it is mostly section 8 housing. 

Not that this will happen everywhere, but definitely a cautionary tale.

Thanks for the response....Just to be clear:

If I sold today for 155K (my original purchase price) the only tax I would owe would be the depreciation recapture (25% of 5,514) because there is no gain. 

Hey Devante-

Haven't done any personal research on that market, but I would imagine Fort Benning has a huge effect on everything. Now, what that means for the market, I'm not sure. Maybe someone else can comment on their experience in an area with a large military presence. 

Helen-Congrats on the first one! What a great area this is-Look forward to talking with you sometime!

Quick details: accidental-ish landlord. Always wanted to get in, just didn't buy this house with the intention of it being a rental. 

Purchased in 2008 for 155,000. Used as primary residence until placed in service on July 1, 2014. Set up depreciation based on value at the time: 140K (103,973 in house, 36,027 in land). Total depreciation so far is 5,514. Payoff on the mortgage is 139,500 today. 

What worries me is that if I were to sell today for market value, the profit would be considered the difference between my new cost basis (which is now a decent bit lower than actual payoff) and sales price and I could very well end up paying money to sell, even when at first glance, there appears to be a gain. 

Honestly, I'd like to unload it and start fresh. Cash flow on the property is minimal, but positive for now, at least until the first major expense comes. Had zero trouble getting it filled the first time. I'm not comfortable with the long term outlook of the neighborhood, but very confident for the next 5-10 years. 

Thoughts/advice? 

Daniel-That sounds great! I'll probably take you up on that as I move forward. 

As far as family, all of mine is in Louisiana.

Greetings from Auburn Alabama. 

My obsession began back in 1996 doing some remodeling jobs with my Dad, who was a carpenter/handyman for the property owners of several small houses. 

Bought my first home as a fixer in 2005 for 60K and sold it two years later after diy reno for 112K. 

Next home was bought as a foreclosure that just needed paint, a couple patches, and a good cleaning. Plan was to owner-occupy for 2 years and then sell. Would have been a great plan if we would have actually tried to sell at 2 years, because at year 3, things fell apart for our area. Now, we are landlords of that property with great tenants and slowly but surely improving values.

The goal is to acquire our next property, hopefully a flip, at the end of the year. So right now, I'm trying to save as much capital as possible, and absorb as much info as possible. Long term, I'm thinking a mix of rehabs and spec builds, but am open to a few rentals, depending on what the market dictates at the time. 

Looking forward to participating with you all-