To Sell or Not To Sell

[Wayne]

Greetings,

I know I have talked about this before but...

I have a house that was my principal residence. I bought another house with 2 basement suites which is now my personal residence. I am currently doing renos on the 1st house (former primary residence) with hopes of either selling or renting. I owe approx $150K on the house and could probably sell for about $275+. this means that I could theoretically put about $125K in my pocket.

The other scenario would be to rent it out. I know that I could rent it at at about $950-$975 pm and cover all my costs with maybe $150.00 cash flow every month. The area is definately changing and values are and will be going up over the next few years.

My concern is the capital gains tax. I want my decision to provide me with the best return whether it be now or over the next few years.


Advice is always appreciated.



Thanks,

Wayne

 

[invst4profit]

Capital gains aside the value to rent ratio on that property is out of whack. The rent is far to low based on the value of the home and should not be considered as a rental.
Based on the value of the money tied up in the property and ongoing expenses in essence you will actually be losing money on a monthly bases not making money. If you can not get over $2000 per month in rent I would sell and reinvest elsewhere.

 

[RCrein]

A couple of thoughts to consider if you chose not to sell your former principal residence. I have heard that if you retain ownership of your former principal residence you can prorate capital gains based on the years it was your principal residence when you finally sell; please check with your accountant before you take this as fact. Second thought is for you to get an appraisal to lock in/document market value at time you change principal residences. Hope this helps. Best of luck.

 

[housingrental]

I agree with Greg`s post above. I`d sell.