Sharkey – I think that is the right kind of analysis to do.
How much monthly income would you get get (pre-tax) if you put the net sale proceeds into the bank. That math shows it a “close” decision – i.e. they’ll be fine either way. I mean, when someone gives you a house and you have no house payment, it is a no-lose decision. You either get $1200/month of revenue (less income tax) or a $250K windfall (less $60K for cap gain tax).
Also – vrundy. If they do sell, I agree that is the best strategy. Take two weeks to a month to clean it up, spend $5 – $10K, spend some time looking at comps, undercut them, get an agent who knows what they are doing.
You can’t write-off capital losses, but they can offset other capital gains, if they exist.
