I own a SFH property in Southern California that I’ve been renting out for the past two years. I have one more year left to decide whether to sell it in order to take advantage of the $500K capital gains tax exclusion. My piti is $3,700 including property management fees and I currently rent it out for $5,000, so it generates positive cash flow of around $1000- $1200 per month. I owe $520k purchased for 800k with interest rate of 2.5% and it can sell for 1.4M. I also own a primary residence duet in the Bay Area, which is financially manageable with 50% equity. Planning to buy a sfh home as a primary home in couple of years in Bay Area around 2.5M. I don’t have down payment for that. I won’t be moving back to SoCal.
My question is: should I sell the Southern California property to maximize the capital gains exclusion, or continue renting it as an investment property?
Sell or rent my property
byu/RecommendationHot131 inRealEstate
Posted by RecommendationHot131
1 Comment
What’s the primary residence in SF (duet? Do you mean duplex?) worth and are you planning to sell it when you purchase the SFH in SF?
What do you do with the cashflow from the Socal rental?
This is mostly an emotional decision without a ‘wrong’ choice and the answer should be guided by your priorities. Some questions I would ponder…
Knowing you want to money for the SFH purchase in a couple years, would you feel better knowing that money was in a CD or something, safe from the irregularities and risks of residential real estate, waiting until you need it and knowing that having it liquid will help you be more opportunistic about your SFH purchase?
Or will you worry that prices will go up in the next year in both places and with your money being decoupled from Real Estate you risk getting priced out of buying a new home in a few years?
Do you like being a long distance landlord and having capital and emotional bandwidth tied up in SoCal?
Do you like the monthly cashflow or does it have no impact on you?