Sell rental or wait until paid off

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Jason44
Posts: 2
Joined: Thu Jun 10, 2021 2:02 pm

Sell rental or wait until paid off

Post by Jason44 »

I have owned a rental house in Arizona since 2005, started renting in 2010 after I moved into current house. I currently owe $60,000 and its currently estimating at $260,000. Sell now, maybe invest in something else, or hold until its paid for (approximately 6 years) and not pay capital gains. I am not a real estate investor by no means, just invested into this house and trying to make the best decision. Thank you
Mardoc01
Posts: 107
Joined: Thu Aug 03, 2017 10:31 pm

Re: Sell rental or wait until paid off

Post by Mardoc01 »

Don’t know how u could avoid cap gains. But I would be interesting what others have to say on this issue whether to sell or not?
renue74
Posts: 1886
Joined: Tue Apr 07, 2015 7:24 pm

Re: Sell rental or wait until paid off

Post by renue74 »

I'm pretty sure you'll realize capital gains in 6 years also. (Unless you die and your heirs get step up basis). :)

You'll also realize all the depreciation of the rental, if you depreciated.

Tax man gonna get his share. Somebody has to pay for all those stimi checks.
LittleMaggieMae
Posts: 855
Joined: Mon Aug 12, 2019 9:06 pm

Re: Sell rental or wait until paid off

Post by LittleMaggieMae »

Are you planning to move back into the rental and use it as your primary home for a few years (and then sell it)?
Are you planning to sell the current rental (now or soon) and then immediately buy another rental property like it (trade up or to a new location) - a 1031 exchange?

How are you planning to avoid the taxes on the sale of the rental property? Why would it matter if it was paid off or not? I thought selling a rental property was taxed as Income (not capital gains) in the year you sell it. Doesn't matter if you owe money on it or not.

AT some point taxes need to be paid.
Last edited by LittleMaggieMae on Thu Jun 10, 2021 2:37 pm, edited 2 times in total.
Carefreeap
Posts: 3048
Joined: Tue Jan 13, 2015 7:36 pm
Location: SF Bay Area

Re: Sell rental or wait until paid off

Post by Carefreeap »

Welcome to the forum!

This :thumbsup
renue74 wrote: Thu Jun 10, 2021 2:30 pm I'm pretty sure you'll realize capital gains in 6 years also. (Unless you die and your heirs get step up basis). :)

You'll also realize all the depreciation of the rental, if you depreciated.

Tax man gonna get his share. Somebody has to pay for all those stimi checks.
Every day I can hike is a good day.
montanagirl
Posts: 1502
Joined: Thu Nov 19, 2009 4:55 pm
Location: Montana

Re: Sell rental or wait until paid off

Post by montanagirl »

renue74 wrote: Thu Jun 10, 2021 2:30 pm I'm pretty sure you'll realize capital gains in 6 years also. (Unless you die and your heirs get step up basis). :)

You'll also realize all the depreciation of the rental, if you depreciated.

OP recaptures depreciation whether taken on sch E or not.
Topic Author
Jason44
Posts: 2
Joined: Thu Jun 10, 2021 2:02 pm

Re: Sell rental or wait until paid off

Post by Jason44 »

No I do not plan on moving back into the rental. I am reading now (which I should have before I post this) that unless its your primary residence you will have to pay capital gains either way. No I was not planning on buying another rental property, but I see you point of the 1031 exchange and buying another property to defer the taxes. My initial plan was to keep it until its paid off or soon after and sell it. Not knowing what the housing market is gonna do, just wondering if its best to sell now or wait.
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cchrissyy
Posts: 463
Joined: Fri May 05, 2017 10:35 pm

Re: Sell rental or wait until paid off

Post by cchrissyy »

the taxes due after a real estate sale don't care if you had a loan balance or not. that's true for a rental or a personal residence. the loan is simply not a factor.
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