Message Font: Serif | Sans-Serif
 
No. of Recommendations: 1
"If you owned and lived in the house for 24 months or more, you *must not* ignore the opportunity to sell it, tax-free, rather than renting it. If real estate is a good investment, buy your rental property with the proceeds of your *tax-free* sale of this house. If real estate isn't a good investment, put your money somewhere else."

Have you guys considered transaction costs in selling? On 160k in gains, a 20% cap gain would be 32k. A 6% commission on a 400k sale would be 24k. 7% would be 28k. If he has to throw in a couple of seller concessions he may avoid the tax but give almost the same amount to other parties.

If he never sells, he'll never pay any taxes. He could move back in at some time in the future and reclaim his exemption as well. There is a definite trend in Congress toward lowering cap gains taxes as well.

Don't let the tax tail wag the investment dog.
Print the post  

Announcements

Disclaimer:
In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.