It’s important to consider the costs of selling versus keeping. I am in a similar boat with a house purchased in 2002. It breaks even and I could sell for about the same gain as you have. I also sold my personal residence in SD in June 2005.
I would have sold the rental but my selling costs would total ~ 20% of the homes value due to commissions and CAPITAL Gains taxes. That’s a guaranteed 20% loss on top of the 10% or so already factored in.
Did you live in the house in two of the last 5 years ?
If so, and if you sell after 7/07 (2 years after previous sale of personal residence) you can take the gains tax-free (minus paying some taxes on any amounts that you depreciated if it was rented out).
If your gain is 180K, the capital gain would be ~ 27K. Not huge enough to make the decision to keep or sell, but large enough to consider. Make sure to take this into account.
In our case we decided to keep the house because of the following financial and non-financial reasons:
1. Cash reserves nearly enough to pay off the house.
2. Positive cash flow.
3. Central coastal SD location.
4. Desire to return to San Diego in the future or use as vacation home in 15-20 years
5. Other diversified investments.
BTW – Your screenname reminded me of the restaurant (Zocalo) in Old Town. Great Food. I miss it.
