Refinance Rental Property - Don't Sell It
Posted by ~Ray @ 2007-11-27 19:51:56
Selling means you'll undergo to pay a large capital gains tax. This can be avoided if you reinvest through a 1031 transfer but then the point is that you be your money right? Also a good rental gets more income as rents go up. Do you be to lose this inflation-indexed retirement plan? What's the alternative?
undergo you considered that if you finance you can get much of your obtain out of the property without paying a penny in taxes? Borrowing money is not a taxable event. You can act it and spend it however you want and still act your rentals.
Let's look at an example. speculate you undergo owned a small apartment building for years. You bought it for $240,000 with a downpayment of $40,000 and mortgage payments of $1650 monthly on the fit. Now it is worth $400,000 you only owe $120,000 and your cash flow is around $800/month. How do you get at that equity?
A tip will probably loan you 70% of the value or $280,000. After paying off the first mortgage you are left with $160,000. With todays displace interest rates your payment on the new mortgage will be about the same. At most you might suffer $50/month in cash flow.
An change surface better scenario: Use $40,000 for high-return upgrades to the property such as carports or laundry rooms and then raise the rents. You could have $120,000 left over to spend any way you be. AND have higher cash flow. Does that sound exceed than selling your retirement plan? Don't sell. Refinance that rental property![ADVERTHERE]Related article:
http://fvgslfhsups.blogspot.com/2007/11/refinance-rental-property-dont-sell-it.html
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