Although not immediately, we do plan on moving to a bigger place at some point. At that point, is it better to sell the primary and trade up, or is it better to trade up a rental property? I get that selling a rental property is subject to capital gain, but 1031 can be done if we decide to trade up with another rental (i.e. rent it out for a while before moving in)?
OTOH, trading up the current primary may be inconvenient, since in seller’s market, it’ll be easier to sell first, and then buy the next one - at which point we’ll have to stay at a temp housing in between. What do people typically do?
I don’t know how many people were successful at that in BA, given how long it takes to find a new property. Most people I know either do the temp housing route, or pull in random ways to finance the new property (gift money, etc etc) if they want to buy first and then sell.
You definitely don’t want to have to ticking clock and end up buying something that’s not right for you. It is debatable topic on this forum whether you should sell and take tax free gain or keep it as rental forever. But if you don’t need equity from this house for your new house, you have 3 years to sell the house after you move out and still claim tax free gain (250K or 500K). So find a place you want in your own timeline, turn it into rental and decide in next 3 years you want to sell it or not.
Ah interesting. I didn’t know there was the 3 year window you could exercise the tax free gain. Thanks!
In that line of thought, selling a rental immediately hits you with capital gain unless you could get another rental within 45 days, correct? This does seem like a riskier move, so I should avoid?
Another option is to move back into the rental, live for 2 years (so make it a primary) before selling. Either way, this moving business takes effort, it seems.
Sigh, now I know why people rather invest in stocks. Just 1 click to buy&sell!