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BCA of Southwestern Idaho
Fall Collection of Homes
First three weekends in October
Saturday & Sundays 11am to 5pm
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Vote for your favorite Fall Collection Home!
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Treasure Valley
Market Report
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With a record number of listings available for sale in the Treasure Valley, perhaps it is time for homeowners to consider becoming landlords.
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A client of mine is in the same boat that many homeowners here in the Treasure Valley are in…they can’t buy their next home until the home they are in sells first. They have a growing family and need to move into a larger house, but are unable so far to sell their current home. The home is priced right, but it is just one of thousands of homes for sale in a saturated market.
It’s understandable…who wants to have two mortgage payments at the same time. They feel their only option is to stay put until their home sells. But, what if they decided to rent their current home? Or better yet, if selling their home in the future is still something they want to do, then perhaps a lease-to-buy contract might be the way to go?
I did some checking into capital gains tax law. If my clients, who are a married couple, rent their current primary residence home for three years, then they will still be able to sell the house and avoid all of the capital gains tax on income up to $500,000. As long as the home was their primary residence for two years of a five year window dating back from the date they finally sell the home, they can get out of those capital gains taxes.
The only drawback is what their new monthly house payment will be without putting significant money down on the new home purchase. By not selling their current home, they will not be able to put down much money. However with rates being very low currently, it is something they are considering. Also, with so many houses for sale, the pickings are great for them right now…and many sellers are willing to negotiate to sell NOW!
I asked a local realtor, Jennifur Newhouse with The Newhouse Team, what she thought about the current real estate market, and if it was a good time to buy or not. She said, “I firmly believe that right now is the ideal time to buy a home. With increased inventory and historically low interest rates, this is the time to find a great deal! No one has a crystal ball to find out what the future holds and if you wait, you run the risk of interest rate increases and the market picking up, therefore homes and loans end up costing you more money. Remember, real estate is a long term investment and it will appreciate over time.”
Before deciding to convert your current primary residence into a rental property, I highly suggest that you contact and interview several prospective property management companies to assess the current rental climate. Also, consider contacting an accountant or other tax professional to go over the tax scenario with having a rental property and rental income, and the effect that will have on your tax picture. If you would like a referral to an accountant, please call Cordell Chigbrow of Chigbrow, Ryan & Company in Boise at (208) 384-1040. If you would like to visit with Jennifur Newhouse of The Newhouse Team, you can reach her at (208) 321-4000.
As for me, if you have any questions regarding a mortgage you might be considering, or if you want more information on this topic, please contact me at (208) 880-0316. You can also find me on the web at http://www.ericsloans.com. Better yet, drop by my office in Nampa, Idaho, and visit me in person!
Regards,
Would you like to be added to my e-mailing list? My monthly e-mailings cover topics ranging from the mortgage market to personal finance to timely market alerts and information. Email me at eric@ericsloans.com and tell me you want to OPT IN to my monthly mailings!
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