I am a US Citizen planning on R2I in Spring 2012. I own a single family home and would like to sell it off. But it looks like I may have to incur a huge loss in terms of my initial investment in the home. One of the options is to rent the home, expecting the market to pick up in 3 to 5 yrs, and then sell it thru an agent. Anyone in a similar situation, or know of someone like this? Pl advise.
If I rent the home I will have to pay my US mortgage + property taxes in the US. Since the income will be all in INR, I will have not much income in the US to claim deduction on mortgage interest/property tax. So, does it even make sense to keep the home?
R2I Spring 2012 - Sell Home or rent it?
R2I Spring 2012 - Sell Home or rent it?
Hello Suva,
I am in a similar situation. I own a townhome. I am planning to r2i in next 2-3 months. There are other properties in the community which have been on sale for atleast 4+ months. I am currently doing some research to make a decision whether to sell or rent. Selling now will be a huge hit which I am not willing to take. But renting is not easy either. What I found is you are better off hiring a Property Mgmt Company and put it up for rent (which generally charges 10% of monthly rent). Ride out the bad market (hopefully couple of years), then put it for sale.
Please let me know if somebody can suggest a reasonable Property Mgmt. company ?
Thanks
I am in a similar situation. I own a townhome. I am planning to r2i in next 2-3 months. There are other properties in the community which have been on sale for atleast 4+ months. I am currently doing some research to make a decision whether to sell or rent. Selling now will be a huge hit which I am not willing to take. But renting is not easy either. What I found is you are better off hiring a Property Mgmt Company and put it up for rent (which generally charges 10% of monthly rent). Ride out the bad market (hopefully couple of years), then put it for sale.
Please let me know if somebody can suggest a reasonable Property Mgmt. company ?
Thanks
R2I Spring 2012 - Sell Home or rent it?
suva;402105I am a US Citizen planning on R2I in Spring 2012. I own a single family home ......But it looks like I may have to incur a huge loss in terms of my initial investment in the home.....
If I rent the home I will have to pay my US mortgage + property taxes in the US. Since the income will be all in INR, I will have not much income in the US to claim deduction on mortgage interest/property tax. So, does it even make sense to keep the home?
You can try out various scenarios of future tax filings using a tax filing software and see how you come out.
After all you will have to file taxes in the USA no matter where your income (& what currency) is earned. Then you'd also have US$ income in rental of the house.
If you sell and you have a loss, whatever you cannot deduct in the first year, can be carried forward to the next.
Fill out a few hypothetical future tax forms and see for yourself which scenario is good.
R2I Spring 2012 - Sell Home or rent it?
okonomi;413673
If you sell and you have a loss, whatever you cannot deduct in the first year, can be carried forward to the next.
If you sell an owner occupied house (non-investment property) at a loss; tax code does not allow you to claim capital loss for it on your return.
R2I Spring 2012 - Sell Home or rent it?
I am in a slightly worse situation. Trying to sell the house for last 1 year. Have lowered the price 3 times, any lower and I will go in a loss. I did explore the rental option, but there were some serious drawbacks that I am backing off from that option:
1. The condition of the house - you hope to get a good tenant, but no guarantees!
2. If the tenant loses jobs and cannot afford rent, very difficult to get them out.
3. Difficult (but not impossible) to sell while you are renting. If you stop renting to sell, who is going to pay for the mortgage (and other carrying cost)?
4. What happens for months between renters? You need to have enough cash in US to cover those months.
5. You rent has to be enough to cover the mortgage+insurance+taxes and maintenance (including property management, unexpected repairs, grass, snow etc.). Difficult to judge the repair costs sitting far away in India. At least in my case financially this wasn't working out.
If the urge to r2i is strong, better to get rid of the property (even at loss). I will be lowering the price again in near future.
1. The condition of the house - you hope to get a good tenant, but no guarantees!
2. If the tenant loses jobs and cannot afford rent, very difficult to get them out.
3. Difficult (but not impossible) to sell while you are renting. If you stop renting to sell, who is going to pay for the mortgage (and other carrying cost)?
4. What happens for months between renters? You need to have enough cash in US to cover those months.
5. You rent has to be enough to cover the mortgage+insurance+taxes and maintenance (including property management, unexpected repairs, grass, snow etc.). Difficult to judge the repair costs sitting far away in India. At least in my case financially this wasn't working out.
If the urge to r2i is strong, better to get rid of the property (even at loss). I will be lowering the price again in near future.
R2I Spring 2012 - Sell Home or rent it?
SetToGo;413984I am in a slightly worse situation. Trying to sell the house for last 1 year. Have lowered the price 3 times, any lower and I will go in a loss.
That's the problem...the price isn't low enough....we base the price based of our personal p&l equation which may or may not be applicable to market reality.
R2I Spring 2012 - Sell Home or rent it?
Trust me, I am in bottom 25% of the houses currently on sale in my area. I have seen houses with lesser amenities being sold for higher and the other way. It's not always logical.
-
Chakravyuh
- Posts: 56
- Joined: Sat Mar 22, 2008 2:29 am
R2I Spring 2012 - Sell Home or rent it?
I was in a similar situation but decided to take a 60 k loss and be done with it. If you are selling, you need to be very aggressive.
-
AbuDhabiNaga
- Posts: 1
- Joined: Mon Nov 02, 2009 6:28 pm
R2I Spring 2012 - Sell Home or rent it?
If you R2I, your global income will be taxable in India, so that needs to be factored in the decision for retaining or selling US property.
R2I Spring 2012 - Sell Home or rent it?
Hello all,
I in a similar situation (sell or rent dilemma) - USC with R2I plans in the next 7-8 months, but with the housing market in severe downturn, I am not sure whether to rent the house or sell my house taking a loss of about 50-60K.The situation with RE overall downturn is affecting property prices in my neighborhood, in spite of very good school district..:(.
Sell Option:
First off, in order to even to sell my house and make it attractive to the potential buyers, I may have to do a slight upgrade to my house which I am estimating to spend about 10K. So, overall a loss of 70K (60+10K) and to reduce my losses, I am hoping to save on the commission costs (4-6%), by trying sell as FSBO. Not sure, if this will work out or not..
Rent Option:
The rent option is very enticing, since I am sure that folks (due to very good school district) will rent my house at the market rental price, which will cover my PITI, however, the hassles of maintaining a rental property in the US, when I am in India is discouraging. Even if I hire the Property rental management companies, and rent the house long term (4-5 years), the potential of growth of RE in the US to the 2005-2006 levels is very weak, at least in the next 7-8 years (IMHO).
I am in a dilemma now and not sure which one is a better option. Any suggestions / advise from the folks who have gone thru this thought process earlier or planning on this front currently, will be greatly appreciated. Also, any updates from the members (suva, honeyglue, SetToGo) on their plan so far ?
Thanks!
I in a similar situation (sell or rent dilemma) - USC with R2I plans in the next 7-8 months, but with the housing market in severe downturn, I am not sure whether to rent the house or sell my house taking a loss of about 50-60K.The situation with RE overall downturn is affecting property prices in my neighborhood, in spite of very good school district..:(.
Sell Option:
First off, in order to even to sell my house and make it attractive to the potential buyers, I may have to do a slight upgrade to my house which I am estimating to spend about 10K. So, overall a loss of 70K (60+10K) and to reduce my losses, I am hoping to save on the commission costs (4-6%), by trying sell as FSBO. Not sure, if this will work out or not..
Rent Option:
The rent option is very enticing, since I am sure that folks (due to very good school district) will rent my house at the market rental price, which will cover my PITI, however, the hassles of maintaining a rental property in the US, when I am in India is discouraging. Even if I hire the Property rental management companies, and rent the house long term (4-5 years), the potential of growth of RE in the US to the 2005-2006 levels is very weak, at least in the next 7-8 years (IMHO).
I am in a dilemma now and not sure which one is a better option. Any suggestions / advise from the folks who have gone thru this thought process earlier or planning on this front currently, will be greatly appreciated. Also, any updates from the members (suva, honeyglue, SetToGo) on their plan so far ?
Thanks!