So, things have gotten remarkably complicated in the last week.
Faithful readers have read my gripes about the house in New Mexico. All of the repairs have finally been completed, so it’s ready for new residents. Unfortunately it looks like I’m unlikely to be able to sell it for enough money to pay the mortgage, the home equity, the realtor’s commission, and the taxes…
At least, unlikely to happen quickly. So, I’ve put it back up for rent, and am hoping that there’ll be some income coming from it in a month or two. I’ll have it listed for sale at the price I need to sell it for, and if it goes, great… but if not, at least it’ll be paying for itself in the mean time.
The tenant who lives at the loft at 626 is talking about moving out, which throws a wrench in my plans. I’d intended to raise the rent, since I’m losing money on it each month… But now I’m worried about how long I’ll have to go without rent at all, much less an increase. Now we’re really talking about complications, right?
Then we get to my current home at M Street… Brandon is going to be moving out soon. It’s hardly a surprise — we’ve been broken up for ten months now, longer than we were a couple. The timing, though, could certainly be better, considering my other two sources of rent are gone or going. So when he moves out, where is that going to leave me?
Three mortgages. No rent. Big problems.
I have a couple of options. I can try to rent out 626 again, and continue losing a little bit of money each month on it. If I can find someone willing to be my roommate here at M Street and replace Brandon in the pseudo-bedroom here, that would put me back to status quo at least…
Or, I can move back to 626.
Now granted, I love my new home. It’s larger, it’s got fantastic amenities, it’s beautiful, etc. But there are some very, very good reasons for me to consider moving back to 626… Mostly, Uncle Sam.
See, if I were to sell 626 today for fair market value, I’d end up owing about $10,000 in taxes (capital gains) on the profits, because it’d be considered the sale of an investment. But when I sell it, if I’ve lived there for two years out of the last five (at that time), then I’m exempt from capital gains taxes on the profit. I only lived there for about a year because of my six months in Tampa, so I’d need to have another full year there for this to work.
So this means I’ve got a really big incentive to move back to 626 for a year. It would suck to leave my new home, but for nearly a thousand dollars a month, it’d certainly be a pretty big pay-off. If I were to do that, though, I’d have to figure out what to do about M Street. Rent it? Try to sell it? Burn it to the ground and collect the insurance? (That’s a JOKE! Mostly…)