All Forum Posts by: John Emmerich

Trying to find some advice about my situation with my rental property. We purchased a 3 bed 2 bath home (built in 2009, 1300sq ft) back in 2015 for $199K and lived in it until 2019 at which time we decided to rent it out. The mortgage/taxes/insurance is about $1250 a month and rent is now $1900 a month so it is cash flowing really well. It has appreciated at nearly an 11% rate since we bought in 2015 and is now worth around $340K. We still have around $60K in student loans at 3.7% interest rate that need to be paid off and we are thinking about starting a family next year (less income from spouse and less time to play landlord). It is a great home in an up an coming area but I am struggling to decide whether to keep it for the long haul or take the amazing profit and get out. One big factor is after next May we will no longer qualify for the 2 out of 5 year exemption for capital gains tax. So instead of just having 10% closing fees we will have an additional 15% off the top. I also don’t think current salaries in our area can support how expensive housing has become here….on top of that this whole covid economic climate is a bit unnerving. Anyway any advice on my situation is much appreciated!

Hello! Hoping to get some information regarding selling a rental that was formally my primary residence. For context for the question here is some info:

• - Purchased the house in June 2015 for $199K (tax value home $126K and land $40K) and lived in it until 2019
• - Started renting it out in June 2019, worth approximately $300K (tax value home $152K and land $56K)
• - Have written off about $8500 in deprecation capture in the past 2 years
• - Current price of the home is now $340K (tax value home $190 and land $58K)

My understanding is that if I have lived in the home as my primary residence for at least 2 out of the 5 years and then sell, I would pay no capital gains except 25% of the recapture taxes I wrote off. If decided to rent it out for another 2 years and lose that exemption how are my capital gains calculated…..is it the difference from the new sale price of the home and the “original sale price” we purchased it for or from the time is was put “into service value” as a rental?

Ex. est 2023 value of $360K - 2015 value of $195k = $165k

Ex. est 2023 value of $360k - 2019 value of $300k = $60K

It is cash flowing really well but if the first example is the tax bill, I might be motivated to sell it and capture my gains. If anybody has any experience or info with this your thoughts are very much appreciated!!