23d • General discussion
The hack inside the hack...
When you live in a home as your primary residence for 2 of the last 5 years there is a hack available to you which is this: You can sell that property and not pay capital gains tax up to : $250k as an individual and $500k as a couple.
I am currently debating whether or not I do this. I lived in my previous home for 3 years, and there's about $200k of equity sitting inside of it. That tenant keeps calling with multiple repair requests and issues that keep coming up. I'm kinda over it.
I have another property that is a small warehouse that I owe $180k on, and since its a commercial note it will need to be refinanced or paid off by November 2026.
Home numbers:
Mortgage: $2,588/month
Rent: $3,300/month
Tenant pays all utilities
Cash Flow: $712/month
Warehouse numbers:
Mortgage: $1,280/month
Rent: $2,500/month
Tenant pays all utilities
Cash Flow: $1,220/month
If I sold the home and paid off the warehouse, I would delete both mortgage payments (free up some obligation from my life) and would transfer the cash flow from the home to the warehouse. This would increase my cash flow by $1,220/month since thats the amount I'm currently paying on the mortgage of the warehouse. $712 to $1,220/month increase with two less mortgages to ensure are paid each month is certainly a win. The potential "negative" is one less property to appreciate in the market over the years, BUT future appreciation is never guaranteed. I do believe the Fed has no choice but to keep printing money so inflation will continue which ensures asset values keep getting pushed, but I don't want to bet my entire investing strategy on that.....AND this dang home will likely keep having issues as it is almost 30 years old, so that will eat into overall appreciation numbers for each repair I have to take care of. The warehouse is a cement box....with minimal items to repair.
Last note, and why I am going back and forth on what to do: I also still need to do the tax hack I teach in this group (a cost segregation study) on the home, to minimize my 2024 tax bill. If I did this and sold the home, I would have to pay back a recapture tax. Screw taxes lol.
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The hack inside the hack...
skool.com/velocitybanking
I teach how to get paid a commission to buy a home, Paying it off in 3-7 years, Getting your tax bill to $0 and having cash flow that funds your life.
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