[Coronita]

[quote=ltsdd][quote=La Jolla Renter]
20 years from now, convert to primary residence for 2 years and sell for $500k tax free gain.
[/quote]

This loophole has been closed with the Housing Assistance Tax Act of 2008. Essentially, value appreciation while the property is a rental is subjected to capital gains tax.[/quote]

Funny you should mention this because I as just talking about this with others and was deciding whether to discuss it here, since most of the posts now on Piggington aren’t finance or re related, so I thought it would be a moot point to discuss and brainstorm… But now that you brought it up. Based on my initial research, converting a rental back to a primary and then subsequently selling the primary will result in the following tax consequences.

1) you end up paying of depreciation recapture on your first rental and any portion of your new home that was briefly a rental

2) your taxable capital gains ends up being prorated based on number of years both properties were rental / number of years your exchanged home is a primary, subject to a 5 year requirement which I won’t discuss here. The longer you use the property as a primary, the less the taxable amount on the cap gains.

So for example if you had a rental for 4 years and 1031 exchanged to a home was rental for 2 years and then converted it to a primary home and used it as a primary for 10years. When you sell it, if you had a $250k capital gains from it, 6/16th of that would be taxable at your capital gains tax rate. 10/16th of it would be tax free…I think… again i just started researching this now.

And, there would be no tax consequences if you don’t sell you new primary.

I think there are also a lot of benefits regarding step-up cost basis when you die and your kids inherit the property, but I haven’t finished that research yet ( I believe both capital gains a depreciation recapture both get wiped out as part of your kids inheriting your estate, but not 100% certain, as I haven’t gone researching there yet)

[Coronita]

[quote=no_such_reality]Actually HLS, why not the other way. Refi the rental, strip the equity,may off the primary and put all the risk into the rental were if something happens on the income front the only thing with the lien is the rental?

A lot of people like the free and clear primary so they don’t worry about an aggressive foreclosure or the perceived cash drain in retirement.[/quote]

Fyi…slightly related …You can’t cash out-refi a rental and then deduct the mortgage interest on the amount you cashed out against your rental… unless you use the equity you took out to improve the property or to buy another investment. In the last scenario, you would deduct the mortgage interest as an investment expense on the new investment. Of course , some people cheat on their taxes probably. But I wouldn’t recommend it since if you get caught your would be in deep shit.

So you would lose your mortgage interest deduction on both your primary (no with no loan) and your rental I think.

Also, a rental you are probably paying 1/4 percentage higher on the loan, and some rentals cannot be easily refinanced or even qualify to get a loan especially if it’s an attached community with less then 50% own occupancy.

[Coronita]

BG I know you’re the type of person who can’t stand not having the last word or zinger….So…. Since you started dragging this thread down a rathole anyway, let’s just completely go down the rathole all the way to sewer. Since I’m a pigg, I love rolling in mud.

If you had 14 of 30 years left on your ARM that is right now 3.6%, and if you are one of the bears that think rates are going to rise once Fed starts adopting a hawkish stance. Then why wouldn’t you refinance into a fixed 15 year at what 2.85ish% or a 10 year fixed at 2.66%ish as you head into retirement, as you claim you are heading, guaranteeing you to have a fixed living cost for the next 14+years instead of putting yourself at risk for an ARM rate increase?

And if you really can pay off your house right now, why not pay off that 3.66% loan (and essentially pay yourself 3.66%, instead of paying the bank 3.66% and letting the bank pay you 1% CD or so?) After all, you’re heading to retirement, if you can pay off your house completely, you should have sufficient working cash after paying off your house to live off of, and your expenses would be low with no mortgage and there would be no uncertainty from a ARM rate increase…

[Coronita]

[quote=bearishgurl][quote=flu][quote=bearishgurl] (blah blah blah) I’m an expert in this subject too. You might be suffering from stress, but I don’t know what I suffer from. Because my malfunction has been going on for decades[/quote]

Sure, if you say so.[/quote]Seriously, this thread should be closed. flu’s apparently gone off the deep end. Instead of polluting his own posts with gibberish, he’s now taken to “inventing” gibberish posts for OTHER posters. That should be banned.

Hopefully, Pigg masayako got the info he needed, left the room and is now making a loan application :=0[/quote]

Can’t answer my last post about the contradictions you just made, versus your professed “expertise in apparently now understanding how mortgages, amortization works”… So what do you do? “Let’s redirect this thread and ask this thread to be closed….”

That’s your typical MO, BG…

Step 1. Argue for the sake of arguing

Step 2. Present things that don’t make sense and don’t add up

Step 3. Wait for someone to point out the contradictions in things you presented as enlightened facts (which clearly they are not)

Step 4. When you have nothing to say to rebuttal being called out for your inconsistencies and errors in what you posted as factual and/or as “the smartest thing anyone else can do” (because you can’t dispute the self-contradiction and inconsistencies), redirect the attention to something else…ask this thread to be closed, vent, get angry, etc,etc…to cover up what you said.

Step 5. If that doesn’t work, stop posting for a few days and come back in a few weeks after everyone else forgot about this thread.

Step 6. Go find a new thread and start over with Step #1.

Hence, why I quoted you on it. What you posted can’t be altered or changed…..

I didn’t ask you about your loan, your mortgage, your retirement. Frankly I don’t care. But you did post it yourself, as if it’s data to back up your professed opinion about refinancing. I’m just merely pointing out, what you post makes no sense to support your position.

Even Harvey’s Economics 101 posts in the previous thread… some of it makes sense (I’d disgree on some key parts, but whatever) Your’s doesn’t. at all.

[Coronita]

So, since you volunteered this information……..

*You have 14 years left on a 30 year ARM that is 3.6%….
*You, in other threads, have agreed with a lot of uber bears that Fed will eventual raise rates and that will cause mortgage rates to skyrocket.
*You say you choose not to refinance because you say your rate (which is variable by the way) is so low (it isn’t)
*You complain on previous threads that things like a CD rate are so low, it’s unfair to people trying to save and that those 1%CD’s are getting eaten by inflation.
* You say you can pay off your mortgage right now if you want to, but choose not to?

And yet, you don’t see the irony of all of these statements you made, which pretty much contradicts each other?

And you say I’m the one that is stressed and can’t think straight? Lol….

Thanks for the good laugh.

[Coronita]

[quote=bearishgurl][quote=flu]BG, we’re talking about mortgages here,

If you know how an amortization table works, you might have something valuable to say. But I doubt you know that, do you?

And this particular thread
http://piggington.com/mira_mesa_7510_bannister_ln_10_lost_in_less_than_one_year?page=4

is the epitome of you commenting on things real estate, finance, investment related you absolutely know nothing about. and proven, time and time again, you’re just plain wrong, despite being an expert in real estate having made exactly 0.00000000000000000000 rental properties over the past decade+, and having refinanced over the past decade exactly 0.00000000000 times to speak from any relevant experience about mortgages (after all, you did say many times you weren’t able to qualify for a new loan many many times)…..

QED

But thanks for hijacking this mortgage thread and self-professing your “expertness” again in a subject matter that is way above your head. I appreciate you proving the point I was just trying to make. Well done.[/quote]There you go again, flu …. blah, blah, blah, assuming, assuming, assuming …. to your heart’s content … umm, except whatever crap you believe about me in your head and are regurgitating here is all false.

FWIW, I actually wrote a program for an excel spreadsheet back in about 2009 which calculated amortization for a “COFI ARM” (11th Dist FHLBB) based upon future projections. It took me about 10-12 hours and it was no small feat to get the last tweak out. If I can find it (it’s in one of my boxes of floppy disks), I’ll be glad to share. I created it to make an exhibit for direct examination on an expert witness in trial (who confirmed its accuracy both in deposition and on the stand).

I was also one of earliest adopters/users of the HP 12C, which figured various amortization scenarios out for prospective buyers and was widely used by RE professionals up thru the early nineties (when there were far more diverse mortgage programs to choose from than there are today). I became quite the “expert” at using this clunky little gem and still have it lying around in its case (likely in one of my file cabinets).

https://en.wikipedia.org/wiki/HP-12C

I’m also an “expert” on calculating property tax rates in the various communities I’m familiar with (inclusive of voter approved bonds, utility/RR districts, etc) but exclusive of CFDs. I don’t need to see the tax bill to do this as I know the percentages for all the additions to the “ad-valoream” portion of the bill in the various communities.

I have been in recent contact with HLS but suffice to say, I don’t owe enough on my mortgage for a refi (w/zero closing cost or not) to make sense for either me or any mortgage broker. Why would I refi when I’m in my 16th year (of a 30 yr ARM) with a current interest rate of ~3.6%? Or, I could just pay it off tomorrow if I wished to? What’s the point?

Lemme ask you, flu. If you were on the cusp of “retirement,” would YOU be refinancing and taking out purchase-money mortgages?[/quote]

Gotta quote you on this before you edit it.

[Coronita]

[quote=bearishgurl] (blah blah blah) I’m an expert in this subject too. You might be suffering from stress, but I don’t know what I suffer from. Because my malfunction has been going on for decades[/quote]

Sure, if you say so.

[Coronita]

[quote=bearishgurl]

There you go again, flu …. blah, blah, blah, assuming, assuming, assuming …. to your heart’s content … umm, except whatever crap you believe about me in your head and are regurgitating here is all false.

(deleted painful detail about cobol program and a HP calculator)
[/quote]
Sure, if you say so.

[quote]
I’m also an “expert” on calculating property tax rates in the various communities I’m familiar with (inclusive of voter approved bonds, utility/RR districts, etc) but exclusive of CFDs. I don’t need to see the tax bill to do this as I know the percentages for all the additions to the “ad-valoream” portion of the bill in the various communities.
[/quote]

Sure, if you say so.

[quote]
Why would I refi when I’m in my 16th year (of a 30 yr ARM) with a current interest rate of ~3.6%?
[/quote]

3.6% ARM 14/30 years left. Sure, if you say so.

[quote]
Or, I could just pay it off tomorrow if I wished to? What’s the point?
[/quote]

If you could pay if off tomorrow. Sure if you say so.

[quote]
Lemme ask you, flu. If you were on the cusp of “retirement,” would YOU be refinancing and taking out purchase-money mortgages?[/quote]

Close to retirement. Sure, if you say so.

[quote=bearishgurl] (anything you say to be construed as expert financial advice or real estate advice, or property location, or property taxes, or about the deductible of Mello-Roos on your income taxes(which on that subject, you were ALSO wrong about)[/quote]

Sure, if you say so.

[Coronita]

BG, we’re talking about mortgages here,

If you know how an amortization table works, you might have something valuable to say. But I doubt you know that, do you?

And this particular thread
http://piggington.com/mira_mesa_7510_bannister_ln_10_lost_in_less_than_one_year

is the epitome of you commenting on things real estate, finance, investment related you absolutely know nothing about. and proven, time and time again, you’re just plain wrong, despite being an expert in real estate having made exactly 0.00000000000000000000 rental properties over the past decade+, and having refinanced over the past decade exactly 0.00000000000 times to speak from any relevant experience about mortgages (after all, you did say many times you weren’t able to qualify for a new loan many many times)…..

QED

But thanks for hijacking this mortgage thread and self-professing your “expertness” again in a subject matter that is way above your head. I appreciate you proving the point I was just trying to make, because for a minute there, I thought people new to this thread and unfamiliar your history would wonder what I was talking about… It appears, they don’t really need to search and figure that out too much now….Well done.

And yes, it’s a free country. You’re free to demonstrate you are completely unknowledgeable in subjects you know nothing about. And that IS something you are an expert at.

[Coronita]

[quote=bearishgurl][quote=HLS]Absolutely Flu,,,
Do u accept bitcoin or Monopoly money ?

I have to bite my tongue to not call the jerks out for what they really are, and even though they don’t think they are jerks,it’s obvious to everyone else.

I actually feel sorry for them.[/quote]Ha ha, HLS … As you may surmise, I, OTOH, don’t have any problems with calling a spade a spade, whether online, on the phone or in person. I guess that trait might have the effect of reducing my “popularity” around here …. lol.[/quote]

No, likeability is not your main problem. its just most of what you have to say makes no sense to anyone logical. And you have a track record of pretty much being wrong about anything investment,real estate, or finance related, as proven by any of your prior posts about those subjects. It seems like how likely you are to be closer to reality in those subjects is inversely proportional to how long your dissertation is on those subjects you absolutely know nothing about.

Often, people respond to your post not because they like you or not. Often, people respond to your post because a lot of your posts are so out of touch with being factual and/or just plain wrong, that we are worried for any newbie that happens to see your post, that doesn’t understand your history of glaringly wrong posts and habit of commenting (with authority) on subjects you know absolutely nothing about. And heaven forbid should actually take your advice (which most likely is wrong) and do something with it (unless it’s doing the complete opposite of what you say).

[Coronita]

[quote=HLS]Hi,
I’m still here 😉
Have just been busy with people who get it
and those willing to listen to an honest explanation
or analysis of their situation.

I have no need or patience for the know it all’s who are clueless ignorant bullies.

Happy to discuss the hard facts with anyone.
Don’t have time to argue with the fiction & opinions of the
stubborn.[/quote]

Careful HLS…. People are probably going to be accusing you of paying me to say nice things about you… Or they might think you’re trying to fish for business here.

Well, since they are anyway, can you pay me just like how other people are going to say you are already doing, when you really aren’t?

[Coronita]

[quote=mixxalot]Fed highly likely to raise interest rates soon in June which if mortgage rates skyrocket will put a dent in real estate prices hopefully.[/quote]

I don’t think rates are not going to skyrocket. Ditto for mortgage rates. if at all, the Fed will probably string along a occasional blip of interest rates over a long period of time. Afterall, the Fed doesn’t want the markets to crash, and they seem to be hell bent on propping up the markets

After Fed raised rates, mortgage rates didn’t skyrocket. Today’s rate is lower than it was right before Fed raised the rates. And certainly, weren’t not seeing a steep drop of buyers interested. How mortgage rates relate to Fed rates? People seem convinced they move in lock-step. I’m not so sure what the correlation is.

My take on housing is more if it has to do with what goes on in people’s mind. If there’s fear on the street because of widespread uncertainty, then that probably will put a dent in people’s appetite. If rates are trickling up but people feel comfortable with their job/career/paycheck situation, and banks still qualify them, I don’t think that will put a dent in people’s appetite for buying. People were saying that large Qualcomm layoff was going to put a dent in housing. t didn’t make a difference, did it?

You got the strongest buyers right now holding on to the houses, purchased at the lowest prices, and maybe purchased with the cheapest loan products in history. In a game of poker, this would be almost equivalent to someone holding onto a royal flush. Almost.

Mortgage rates are not going to affect people who already bought and making their payments on their house. Their cost is fixed. And even if there is a slight depreciation on their house, they aren’t going to sell to “take a loss” only to buy another house, now with a new loan with higher interest.. because their payments on that smaller house with higher interest probably ends being the same as their previous loan on the older house that is underwater.

Me? I’m not selling anything anytime soon. Unless I get more than 100% appreciation, then I might consider it. Getting close on one. So maybe in that case. So multiply people like me with others that bought and were stacking them when rates were low, prices were low, and now rents are high…There is very little motivation to sell in the near future. That’s the problem with inventory.

[Coronita]

[quote=mixxalot]True and same holds water in real estate. If the market turns cold you can lose that 20% down payment quickly as we saw in the last real estate downturn.

Research is your friend. I read morningstar and the different investment rags. I dislike 401k because they limit fund choices.[/quote]

You can’t live in your stocks.

Think of a primary home as a mixed product.
1. Provides housing
2. Forces you to save
3. If your mortgage + operating cost is already close to rents, the extra mortgage interest deduction (and property tax deduction if you aren’t hitting AMT), is just extra icing on the cake.
4. You don’t have to deal with a pain in the ass landlord or wondering if he’s going to jack up rent next month, or if he’s going to sell the house and make you move.

Your 20% decline in stock is most likely immediate (unless you are one of those people that like to speculate in the short term, and then when you take a 20% bath, your short term speculating suddenly becomes a long term buy and hold investment 🙂 )

Your 20% decline in housing is spread out over the utility of your use of a house as a primary. Also, over a long period of time, if you can cash flow the thing as a rental, even better.

I’m not suggesting you go out a buy a house right now, but I’ll agree renting for an extended period of time in SoCal is a losing proposition with the way rents have been and are going. If you think rents are significantly cheaper, you’re probably not doing an apples to apples comparison. You’re probably pricing a rental house that is less than the house you’re looking to buy. The problem with the rental markets these days is that there are so many people that cannot quality/afford to own, and lending standards are still pretty tight, and the inventory in San Diego is not exactly keeping up, since the majority of the new homes being built are the more expensive $800k+homes.

[Coronita]

[quote=harvey]LOL, “only solicit opinions from people who agree with me.”[/quote]

More like, talk to many people who have different opinions who aren’t dicks and don’t have an axe to grind for whatever reasons.

No wonder most of the old timer posters have disappeared. Piggington posts is more like a cesspool these days

[Coronita]

[quote=mixxalot]Or pay 1500/month rent and invest 1500-3k in high growth stocks[/quote]

And if you make a bad pick?

[Author]

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