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Celebra Queen
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Moving out of primary residence

Celebra Queen
Posted Apr 3 2023, 10:48

Hi, my daughter purchased their primary residence in Fort Lauderdale with a conventional loan in November 2022, but she got a very good job offer and they plan to move to Texas by the end of April. What would be an implication of selling the house tax wise or is it better to rent the house because of the location? The house has almost no equity, so very little or no gain by selling as of now, but I do not think it would be possible to pay two mortgages, if they buy a new house in Texas without renting the first one in Florida. Please advise what would be the best steps for her to do? Thank you very much for your help! 

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Taylor Dasch
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Taylor Dasch
  • Real Estate Agent
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Replied Apr 3 2023, 10:53

Im far from an expert in the tax portion of real estate but I sold my house after living in it for less than a year and had to pay taxes on the gains, however I dont think it was as much as you typically have to pay since it was my primary residence but a tax advisor would be the best person to answer that question. 

If she sells the house, it sounds like she would be in the negative at closing. Does she know what the numbers look like when renting the house out? If she can get some cash flow from the property and still be able to purchase a home where she is going in Texas, I believe that would be the best option. But if she would have to be paying out of her pocket each month, it may be best to just cut the losses on the FL property and start over in Texas. 

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Replied Apr 3 2023, 11:35
Quote from @Celebra Queen:

Hi, my daughter purchased their primary residence in Fort Lauderdale with a conventional loan in November 2022, but she got a very good job offer and they plan to move to Texas by the end of April. What would be an implication of selling the house tax wise or is it better to rent the house because of the location? The house has almost no equity, so very little or no gain by selling as of now, but I do not think it would be possible to pay two mortgages, if they buy a new house in Texas without renting the first one in Florida. Please advise what would be the best steps for her to do? Thank you very much for your help! 


1. rent the FL place til Q1 2025 and then sell exactly at Q2 2025
2. could buy now in TX by showing the lease agreement of FL place

This is very easy to solve ...

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Bill Brandt#4 1031 Exchanges Contributor
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Bill Brandt#4 1031 Exchanges Contributor
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Replied Apr 3 2023, 11:45

Just sell. It’s unlikely it went up 10% in 6 months (her approximate selling costs) so there won’t be any taxes due. She’s not going to cashflow as a rental so it’s going to be a negative when trying to buy her new home. 

The ONLY reason to hold would be a greater than 80% chance she’d move back to Florida within a few years. 

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Mohammed Rahman
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Mohammed Rahman
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Replied Apr 3 2023, 11:48

Hey @Celebra Queen - I don't recommend selling the house so soon especially if she can afford her move to Texas while renting out the Florida property. She may not be ready to be a landlord, and in that case she should sell. 

However, if she were to sell in such a short amount of time more likely than not she would end up having to come up with cash at the closing. 

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Minna Reid
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Minna Reid
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Replied Apr 3 2023, 12:49

It is unlikely you would have any gain - more likely losses. She could sell if she can afford the loss. Short sell if she cant and she qualifies for a short sale. Renting is an option, but run the numbers and see how that looks - make sure to include ALL rental expenses. If its at a loss or break even, best to sell now. 

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Kevin Coco-Senyszyn
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Kevin Coco-Senyszyn
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Replied Apr 3 2023, 12:54

If you can cash flow with a rental, keep it. You said there's not much equity anyway, so if she can get a lease to cover the PITI, that would be a great cash-on-cash return in the long run.

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Ben Einspahr#2 House Hacking Contributor
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Ben Einspahr#2 House Hacking Contributor
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Replied Apr 3 2023, 14:37
Quote from @Kevin Coco-Senyszyn:

If you can cash flow with a rental, keep it. You said there's not much equity anyway, so if she can get a lease to cover the PITI, that would be a great cash-on-cash return in the long run.

 Agree!  @Celebra Queen Plus sounds like this is a primary loan so your returns on that 5% investment will be amazing even if it has small negative cashflow. Example below

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Lawrence Potts#3 House Hacking Contributor
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Lawrence Potts#3 House Hacking Contributor
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Replied Apr 3 2023, 15:12
Quote from @Celebra Queen:

Hi, my daughter purchased their primary residence in Fort Lauderdale with a conventional loan in November 2022, but she got a very good job offer and they plan to move to Texas by the end of April. What would be an implication of selling the house tax wise or is it better to rent the house because of the location? The house has almost no equity, so very little or no gain by selling as of now, but I do not think it would be possible to pay two mortgages, if they buy a new house in Texas without renting the first one in Florida. Please advise what would be the best steps for her to do? Thank you very much for your help! 

As far as tax implications go, I am not an expert or professional and I am not giving any advice. We were in a similar situation years ago when we were wanting to sell our first home. We had about a $40k gain give or take, but we were able to apply for an exception through our CPA, kind of a "get out of jail free" one-time lifetime card with the IRS that allowed us to defer. I highly encourage you speak with your CPA about it though. I am not aware of other requirements.

If they plan on buying in Texas, they will most likely need a signed lease in place to offset the mortgage payment on the Florida home. If they can get that, it will help not negatively effect their lendability in TX.

As far as renting the FL home, there are other options going Mid-Term or Short-Term. You'll need to have an operator in place (maybe a property management company that can operate for you for a premium) but could be profitable. However, as long as you are able to break even, it may not be a complete loss when considering tax depreciation, interest write offs, writing of repairs, cost segregating, principal paydown, etc. Maybe you can hold on to it for a few years and break even until you have enough equity and then sell.

IRS code states that you can defer capital gains tax on the sale of real estate if you can show you lived there for 2 out of the 5 most recent years.

Hope that helps! Best of luck. Let us know how it goes and if you need anything.

Real Estate Agent Oregon (#201244569)

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Ray Hage
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Ray Hage
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Replied Apr 4 2023, 04:05

For now, keep the FL house as a rental even if it is only breaking even in terms of cash flow. I doubt there are going to be any significant gains to be taxed but what will cost some money is putting it back out on the market and having to pay the realtor, fees to title company, state tax/stamps,  fees to lender, etc. Another positive is that if she plans to move back in a few years, she would already have a house vs buying again. 

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Lucia Rushton
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Lucia Rushton
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Replied Apr 4 2023, 06:56

@Celebra Queen to me this is the ideal way to start as an investor. Can she rent it at a profit ?

Then when she gets to Dallas she can buy a new personal residence and rinse and repeat.

DM me if you would like to discuss it further.

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Bruce Lynn#1 Real Estate Agent Contributor
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Bruce Lynn#1 Real Estate Agent Contributor
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Replied Apr 4 2023, 08:18

Have her check with CPA to run all the exact numbers.

My thought would be to sell it....after a year probably little to no gain....so litte to no tax will be due.

If she keeps it as a rental, then all that does is turn the potentially short term capital gains into long term capital gainsou full.

I often think the primary you buy is often not the rental property you want.  People being forced into long distance and unwanted rental property to me is often not a great situation.

As you say, it may also prevent her from buying in Dallas if that is what she wants to do.   SHe may also want to check with a lender to see if she qualifies for two mortgages or what the lender will require to do that.  Some may want to see a year of rental history from 1st time landlord....also they may only give her 75% of the rent credit towards the debt payment.

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Rafal Soltysek
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Rafal Soltysek
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Replied Apr 4 2023, 11:40

Why buy in Texas if she is not sure she’s gonna be there either for awhile??— you cannot buy homes wherever job takes you … rents r high in So Florida,- so I wud look at that as investment property unless she’decides move back and occupy the property….

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Kyle Mccaw
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Kyle Mccaw
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Replied Apr 4 2023, 12:36

@Celebra Queen Sounds like she needs to rent out a house in FL. Which also happens to be a great way to build wealth.

  • Property Manager TX (#0562767)

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January Johnson
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January Johnson
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Replied Apr 4 2023, 15:50

I tell most people to "never" sell a property once they own it.  I know there are exceptions, 1031 situations, etc., but when I think back to my first home that is now worth 10X what I paid for it and would have been paid for 15 years ago, I cringe at my 28 year old self who sold it way too soon...

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Brett Voorhees
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Brett Voorhees
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Replied Apr 5 2023, 11:10

Hey @Celebra Queen, really depends on market rents and the potential of taking that route. Obviously if you rent it, you would have to get more than what that mortgage payment is or else it becomes an expense. I do understand since November of 2022 in some areas equity gains have been minimal plus that time window of ownership is very short. I am an agent in the area and work with many investors as well as home owners. Anything from flips to airbnb to rentals and sales. Let me know if you are looking to put a game plan together and we can find out the best route for you and your daughter to take.

I will shoot you a message with my contact info now. 

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Basit Siddiqi
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Basit Siddiqi
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Replied Apr 20 2023, 17:58

The cost to sell the property will likely be around 8% - 10%.
She likely will not have a gain after factoring in the closing costs upon sale.

If it makes a great rental, turn it into a rental.

What she paid for it in the past has no bearing with whether she should sell or not. That is sunk cost / information.

Best of luck.