Advice on Next Steps Please!
Hello. We are currently house hacking a duplex. We are 6 months in. Everything is running smoothly. We are starting to discuss next steps. We are considering staying the 2 years to avoid getting taxed if/when we sell. My understanding is when the time comes, we won't get taxed on only HALF of the sales, correct? Since we live in half the property?
I guess our next question is what to do next. While living in the duplex, we will save some money. But the question is what do we buy next? A part of us wants our own home already. I thought maybe looking into buying a SFH, living in it 2 years and then renting it out. So this way, in 3 1/2 years, we can finally buy our own home. So we'd have our duplex, a SFH, and our own home. Another reason I'm not to keen on a 4 plex is b/c of my dogs. I need a yard. It may seem like a small detail, but that's important to me.
I'm not looking to own and rent a ton of properties. Just a little to help with investing in our future. My concern is with having multiple properties, does our ability to buy a home get more difficult? I know rent offsets, but I've heard ppl say it gets harder to find a lender with multiple properties in your name.
I know it's a lot to unpack, but if you have any advice or your own personal experience, I'd appreciate the help. Thanks!
#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
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#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
- Investor
- Austin, TX
If you make it your homestead and live in it for 2 of the past 5 years you won't be taxed for up to 250k in profit. If you are with a spouse that is 500k
@Gina Huerta if you live in the property for 2 of the last 5 years you will be shielded from capital gains tax of 250k if single 500k if married. Depending on what your goals are I would look to buy a good cash flowing 3/4 unit. That will allow you to scale slowly and get a few properties that will perform really well! I also dont want a ton of doors just enough to live comfortably!
The answers here must have missed that you are asking about a duplex as opposed to a single family. You are correct that since you are not occupying both sides that one side(50% if both units are identical) would be subject to capital gains on any profit made. Profit on the occupied side is exempt up to the 250/500k maximum. If the square footage is different then a percentage of the entire property would be subject to capital gains
As far as what to do next, that is just a personal decision based on your families wants and needs. Most people would desire a single family especially if a yard is a priority
yes Greg is correct if you only live in 1/2 then 1/2 the gains should be taxable (assuming the sq footage is the same - like Greg explained) - but if more then a year then at least at long term capital gains rates. As far as what is next, there should be some better deals coming our way. There are many layoffs happening now and coming down the road. That for sure will provide for more opportunity - be patient for the right deal.
