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m RENTING AND SELLING HOUSES if you have the least bit of knowledge your input would be greatly appreciate?
if you are a land lord and you put a 25% down payment on a house and then you sell it and your tenants have paid off some of the morttgage but you are ready to sell the house
but you HAVE in fact paid the 25 % down payment for the second house and you decide to sell it will you
lets say the house costs 150 000 bucks and you sell it for 170 000 will you get that money even though you are a land lord that is selling a house that is not totally paid for
- 1 decade agoFavorite Answer
i am assuming that you did not refinance the first house, so therefore:
170k - 150k = $20,000, all of which you get
25% of 150k = $37,500 was your downpayment
$150k - $37.5k = $112,500 = principal balance of first house's loan, which is probably now even lower from your paying principal and interest already to the lender. but the lender wants whatever principal is still owed on the $112,500. if you paid the mortgage down already to $100k, then you gross, not net,
$50k + $20k appreciation = $70,000 gross proceeds
now you deduct your costs of selling and you get x, which is the net amount you walk out of closing the first house sale with.
that takes care of house no. 1
if you want to continue to invest in any type of rental property (that which you do not live in, or that which you do live in and rent out other parts of, such as a 3 flat) and save money,
call your real estate attorney and ask how you do a "1031 starker exchange," so you do not have to pay uncle sam a lot of $$$ in capital gains. you must also consult with your CPA and/or estate planner so that proper computations are made for cost basis, depreciation recapture, capital improvements, and adjusted cost basis so that the correct number of dollars of gain can be deferred from capital gains tax. buying another house that you rent out is a "like kind" property exchange, which qualifies you to do a starker exchange, but if instead, you took your gain and purchased stocks and bonds, that would not be "like kind" property, so you'd still pay bookoo dinero on capital gains from the sale of house no. 1.
consult your professionals and get rich over time.Source(s): Realtor, broker-owner, consultant, trader, investment specialist, blah, blah, blah...
- 1 decade ago
Most houses aren't totally paid for when they're sold. Whether or not you're a landlord doesn't have anything to do with it, except for notifying your tenants in accordance with the lease terms, and tax on your profit because it's not your primary residence.
As far as what money you get from the sale, it depends on two things: the payoff amount of the mortgage, and your closing costs. Assuming you list your property with a real estate agent, they can help you estimate the closing costs. Anything left over after that belongs to you, and you'll probably owe some tax on your profit. Unless you do a Starker Exchange which someone else here mentioned, capital gains tax is currently at 15%, so take 15% off what you expect to get as profit after the mortgage and closing costs are paid.
- 1 decade ago
Buddy, dont rent. I had 2 houses up for rent and pad nearly
20 000 to fix it up after they came. RUN!
- KackyLv 71 decade ago
You get all of it, then you have to turn over the difference to the mortgage holder on the first house.Source(s): The people we bought our house from were doing this