Moving into a rental property - how?

[Matthew Neumann]

Hi all,

I am interested in purchasing a second home and having it as a rental for a couple of years and then moving into it as a primary residence. The house would be in a location I am more interested living in, however, I am not quite ready to make the full move. I currently own my home and would either sell it when I was ready to move or rent it if the numbers made sense. How does one go about this? I am in Michigan if that helps.

Thanks!

[Bill B.]

Just get a normal rental loan / insurance and rent it out. When you’re done renting it out you move in. The major downside is because it will be a rental first you won’t get 100% of the sec 121 exemption on capital gains if you ever sell. Only a pro-rated percentage. Though if you hold it until you die you still get the stepped up basis.