One follow-up question: In terms of calculating the number of years of rental income it would take to "make up" for what you'd get if you took the alternate route to sell now and avoid capital gains.... does it make sense to say, for example's sake, we sell after the 2-out-of-5-year period and profit $280,000 ($700k sale price minus $420k purchase price), and at a 20% capital gains tax rate, we'd pay roughly $56,000 in taxes on the profit. If we're netting after expenses (accounting for annual operating AND capital expenses) a monthly cash flow of $700 or $8,400 annually, it would take 6-7 years of rental income to neutralize the capital gains taxes? So instead of comparing to the total profit, you're comparing to just the total amount you owe to IRS for taxes. If this way of thinking makes any sense (?)... you have to rent for 6-7 years to even out the taxes paid when you go to sell (doesn't really account for increased rental rate over the years), but you'd STILL have the appreciation profit on the home, and you could have also taken a cash out refi on the home at some point if needed to put into other profit-producing investments (I do realize the refi impacts the overall model of course). THANKS again for any input!
