NSR, good point about the capital gains tax. But I still say SELL. If he doesn’t plan to live there in the future, then what is the point of hanging onto it? He’ll still have to pay capital gains tax if he keeps renting it and sells in 3 years.
Get as much profit out of it while you can. We can all debate here how much prices are going to go down in SD, they may or may not ever return to 1998 levels. However, I don’t think anybody here really believes prices are going to go up in the next 3 years.
Sell now, take your 150-200K after tax profit. Invest it in something other than real estate, and you’ll have a kickass down payment to buy the house of your dreams in 3-5 years.
