All Forum Posts by: Wojciech Grajewski

My Goal: 

- Purchase a Multi family house in the DC area (inside of DC or in Virginia or Maryland) 

My Situation:

- I own a Single Family Home, which is my primary residence, that I purchased in 2016. However, I have never lived in my home since I have been stationed in Europe for 5 years. Because I have NOT lived in my house IF I go to sell it right now I will pay capital gains tax. This is because I do not meet the IRS requierement of living in my home for 2 out of the last 5 years. As of December 1st 2021 my house will be paid off. Purchase price was $225K ... current value $475K-$500K. 

Question:   

- How do I convert my primary residence to an investment property to eventually do a 1031 Exchange and purchase a multi family?  

@Joe Villeneuve This makes sense and I would love to take the house and sell it and put it in the next deal however since I'm stationed over in Europe as a contractor and I have no lived 2 years out of the last 5 years in my home I would have to pay capital gains tax when I sell or trade in for a different property. Also, I can't do a 1031 exchange since it is not a rental property to avoid capital gains tax. I 100% agree with what you are saying. I have so much money tied up in equity and would love to release it. 

So I guess the question then is ... since I have $170K in cash I guess the smart thing to do is to buy multifamily for about $800K ... what do you think? 

@Dave Spooner

Thank you for the article. I will take a look at how much it would cost me to refinance the house but this would be a good avenue to go down. 

According to my calculations, I can also pay off the house in the October-November time frame, which could be an option instead of paying for the refinance fees. 

@Joe Villeneuve

I purchased the house 5 years ago for $225K. I live in an old military housing community which means that houses around me are all the same and they are currently selling for about $430K-$480K. Taxes are cheap ... about $2K a year ... insurance is $1800 a year. 

@Theresa Harris

My mother lives in the house and takes care of it

SITUATION 1:

I purchased a house with a VA loan (this means I cannot rent it out) for $225K located in Long Island NY. The current mortgage is $200K. The current rental value is $2,400. The PITI on the house is $1300. I can't sell it cause I have no lived in the house in the past 5 years.

Should I refinance out of the VA mortgage and rent the house out?

SITUATION 2:

I have $170K in cash. I am currently stationed in Europe right now so it's hard to get the travel back to the states to find a rental property. 

With the above mentioned ... what would you do in my situation? How would you take my situations and invest or create passive income. 

Any input is appreciated. 

Thank you!

@Mark H. Porter -  Yes, my cousins has bee living there since for about a 1 year now. 

It has never been rented. 

While renovating the home I used high end finishes expecting to live there. I am leaning away from renting since tenants will not take care of the house (not as well as I would) and I would have to do some renovations if I rented it out for the next 2 years.

I will have to pay Capital Gains tax IF I sell since I have never lived in the house. I don't qualify for the 2 out of 5 years exemptions (IRS Publications 523). Also, I miss wrote by saying that I will have to pay any taxes beyond the capital gains tax. 

Is there any way to bring those capital gains taxes down? Writing off cost of renovation? 

Hello,

I purchased a home with VA mortgage in July 2016. From July 2016 to April 2017 I did not live in the property (it was livable but I decided against it) because I was doing a whole home renovation. From April 2017 till now I have been stationed in Europe with US Army as a civilian contractor. My questions are as follows:

Should I rent the home out? I would be making very good profit BUT I'm afraid I would have to renovate the house since I renovated it with high end finishes (I thought I would live there).

Should I sell it? I would make $250K profit assuming I do not have to pay capital gains tax. 

I might qualify for the capital gains tax exclusion but still end up paying a lot of money in taxes.

Also, I have a very good paying job which I would not want to leave until my business is up and running which could take at least 1 year. 

Any opinions on this situation would be greatly appreciated it. 

@Mindy Jensen this will be helpful. Thanks!

Nathan G. 

Thank you for the brutal honesty. I definitely needed it. You are correct in everything you said. The only issue I forgot to mention is that I live in the home as well and the house has a VA mortgage on it, which means I cannot rent it out to anyone else. Selling the home has not been an option since the house is appreciating a lot in value in the past 3 years and will continue to do so due to high house prices and lack of affordable housing. I purchased the house for $223K and dumped about $55K into it. It is not worth $400k. Any suggestions what to do?