Sell or rent

[scottyboy75]

So my wife got a job offer that is very tempting. The downside to this is the company is 3 hours away. I would have to stay in SLC while I worked as a CFII for at least a year or so. The question comes is should we sell and I rent a room from some buddies, or do I stay and rent out to some buddies. I just can't decide. Anybody here have any input/ experience as to which route seems the best I have racked my brain for awhile now and can't decide which is better. In a year and a half we will end up selling the house anyway.
Shane

[Minnesota_Flyer]

Well, run the numbers for yourself. But if you can swing it, it is usually better to be the landlord. You might actually make some money on the operation.

Terrible market to be selling into anyway.

[scottyboy75]

The numbers come out about dead even. The market here in SLC is doing quite well and about to pick up. The average home is listed for about 41 days. So I am still on the fence. The only down side to selling is I leave Sugar house.
Shane

[TheWife]

My concern about renting would just be about potential damage, people not paying rent, etc. But if they are your buddies maybe you know them well enough that you know they wouldn't do that? One thing though, buddy or not, have official contracts!! No verbal agreements.

[JayAre]

My wife and I are going to be moving to SLC in August after the baby comes in July. We plan to rent the first while. We both have been shopping online for places that are close to airport, murray school district?, safe, and affordable if that exists.

I just saw in sugarhouse how big of home?

[scottyboy75]

It is 1900 sqft. I just remodeled it this year and it appraises at around $300. I should clear enough to pay off all my bills and then some so we are more than likely going to sell.
Shane

[JayAre]

Originally Posted by scottyboy75

It is 1900 sqft. I just remodeled it this year and it appraises at around $300. I should clear enough to pay off all my bills and then some so we are more than likely going to sell.
Shane

Ouch remember I work for AMF. I aint no high paid rotor head like you.

What are homes like that renting for in the valley anyway?

[scottyboy75]

It depends on where. I do know of a house in Sugar House that is renting for 1100 a month. Stay away from the West Valley area It is not the best area I have been told. PM me if you want and I can give you the number of a friend of mine who has a bunch of rentals and more than likley has some coming open. She tends to be very reasonable in her rents.
Shane

[wheelsup]

Originally Posted by scottyboy75

It is 1900 sqft. I just remodeled it this year and it appraises at around $300. I should clear enough to pay off all my bills and then some so we are more than likely going to sell.
Shane

Have you had it over two years? That way you won't pay taxes on the gains. If you've had it less than two I'd rent it out to buddies as well as use it as your primary dwelling until then.

[scottyboy75]

I have had it two years. But the way I understand it is if it is used as a primary residence for greater than six months in two years you are exempt from capital gains tax.
Shane

[wheelsup]

Originally Posted by scottyboy75

I have had it two years. But the way I understand it is if it is used as a primary residence for greater than six months in two years you are exempt from capital gains tax.
Shane

For the answer, go straight to the IRS web site...

Publication 523 (2006), Selling Your Home

"Excluding the gain" is what you want to do.

Also read the part about "Ownership and use tests" a few paragraphs below "Excluding the Gain". That answers your question. A recap:

To claim the exclusion, you must meet the ownership and use tests. This means that during the 5-year period ending on the date of the sale, you must have:

• Owned the home for at least 2 years (the ownership test), and
• Lived in the home as your main home for at least 2 years (the use test).

As always, consult a qualified tax accountant.