Posted by JHyre in Ohio on April 16, 2002 at 06:30:58:
The rental house gets depreciated. If you sell within 3 years (assuming that you lived in it for at least 2 years), the sale is tax-free except to the extent it was depreciated…that depreciation “recapture” is taxed at 25%. The new residence is not depreciable.
John Hyre
Hey Bill!! - Posted by Bob
Posted by Bob on April 15, 2002 at 21:00:40:
My wife and I want to purchase a new house. I’d like to keep our current house and rent it, which would by my first property in the creation of my real estate “empire”. We’ll buy the new house by tapping into the equity in the current house, being careful to make sure the property cash flows.
Question: What are tax implications, bad or good, if I do this??? My accountant basically says there are no real advantages to this. I’m told by a mortgage broker that I SHOULD do this for the depreciation on both homes. (yes - I realize he wants my mortgage business, so I take his advice with a grain of salt)
Would you do this if it were you??? Your thoughts?