[quote=ocrenter]
yup, totally forgot the most important carrying cost. I have to assume 5% interest since his first was full jumbo. Which means $5200/month in principal and interest. That’s roughly $187k.

with the $220k from my prior post, we are looking at $407k loss for the whole affair.

of course, a third of it should be tax deductible. so probably just around $270k in real losses.[/quote]

The $125,000 question is whether this was a principal residence.

If it was, take that 270k and subtract $125,000 of the money he would’ve spent renting a comparable house for 3 years.

If it wasn’t, add back $125,000 of tax deductions because you’re not supposed to deduct interest on a second home that you hold for resale.