Rent my home vs sell? Taxes and long term strategy
I’m looking to find some help in understanding what options and the long term tax implications for what I’m considering.
I’ve found a home that could accommodate my family and my 79 yr old mother comfortably.
My mother and I both own our homes and there are significant increases on their value… maybe 500k for her and possibly 1.25M+ for me. Her house is in a trust and I am the beneficiary.
I was considering renting the homes put, they are on large acreage and are very nice. We would like to have the option to have the land down the road / move back.
The REA suggested we get a market analysis so we know what they are worth and did point out that tenants rarely take care of the property as we would. The new property is 30”min from pir current home.
I’m trying to be smart about what capital gains I’d have, and the fact that I would inherit the other property and it would adjust the basis at that time.
I’m also aware that I only have “a couple years” before I could no longer have the capital gains exclusion once we move out to decide to sell.
I’ve need to understand the different considerations I should take into account and not sure who/ where I can get objective advice. Would appreciate those who are more knowledgeable to chime in. Of course I feel rushed bc the new home just listed 10days ago and we are very interested in it.
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Great question! Unfortunately I don't have all the details you asked for … but one gem that comes up in the ChooseFI community a lot is regarding one part of your post:
> I’m trying to be smart about what capital gains I’d have, and the fact that I would inherit the other property and it would adjust the basis at that time.
The ChooseFI phrase is "Don't let the tax tail wag the investment dog". You can also broaden that to not "wagging the life fulfillment dog". Many folks I know would rather have sold their properties to free up capital for living life otherwise; holding on to things to avoid a tax hit cost them years of property management anguish.
It may not be the right decision for you, but it's something to consider. If you're not actually really excited to manage the properties as a business (or, alternately, are VERY OK taking on both hassle AND a potential loss), then maybe the best thing is to move on to the next season of live–tax optimization be damned!