What's the best thing to do, Rent or Sell our Home?
We're at a crossroads of what to do and seek advise from experts both in the investing and financial areas. Here's our situation...
Our Home is worth $450K (according to comps provided by our RE agent). We own the house free and clear. Taxes are out of this world where we live at $9,000 per year. We want to take out a loan to cash out some of our equity (say 50%) but we can't get qualified with the incredibly tight lending laws these days due to our self employment income not being high enough even though we get over $4,000 monthly on top of our self employment from my wife's dad's retirement fund but can't be used in Texas as income because she's POA and POA money can't be used (Power of Attorney).
So we decided that maybe (with our daughter graduating HS in May) that we should instead sell our house and downsize from 3750 sq.ft. home to 2200 - 2800 sq.ft. home out of our city and cut taxes in half and cash out to fund our RE investments.
Then we thought that maybe we can cash out instead one of her dad's annuities (valued $311,000) and buy a new home with that and instead lease our home (high lease area due to the top level schools in all of Dallas county). We can get about $3,000 to $3,200 per month in lease which after taxes and insurance is $2,000 to $2,400 income monthly.
However, not sure what the tax hit is on cashing out the $311K from her dad's annuity but thought that we can use the IRS form 709 gift tax form to limit the taxes and take the gift and pay for a new home which may or may not affect taxes. We're calling our CPA Monday to ask but thought I would ask here since there are so many RE and professional people here.
If we purchased a home and leased our house, that would be our second leased home on our portfolio and move the income from his income to our income which could help us get qualified down the road. Depending on the price of the home we get and any updates we want to do, this might limit us to any cash out but would increase our monthly income to help pay for our daughter's college in the fall.
OR we sell our home and cash out about $120K - $150K and use that to finance a fix and flip home (maybe with some private money or hard money help). Tough decisions. What would you suggest or in our shoes do?