Long time lurker here ( 2001 ?).
I have to move closer to my w*rk (for the past 9 years I had 70 min commutes one way, now close to 90 min ). I'm planning to RENT my current house which has a great deal of sweat and bubble equity in.
I need advice regarding renting vs. selling my current residence. I'm trying to figure out what the minimum renting amount should be in order to break even (i.e. the monthly cash flow be 0)
Here are the numbers (maybe not be close to reality, but for illustration purposes)
Property value (excluding land) $270k. For simplicity, let's assume the 27.5 year depreciation is 10 k/year.
Outflows :
My understanding is that the depreciation and rental income is taxed at your income level. Let's assume income is >100K and tax level is 20%. So 10kyear(depreciation) @ 20% will yield a tax benefit of 2k. => 2000/12 = 166. I'm not sure if there are also other tax advantages as well.
Rental income = Total outflows - tax write-off = 2500 - 166 = 2334/month
Are my calculations off ? I'm looking at suggestions of where to look to get input or what books should I might read -
PS Having a new mortgage will delay my FIRE ! but had to do to spend more time with my two toddlers !
Thank you in advance !
Tzukulika. 15 years to go to FIRE !
I have to move closer to my w*rk (for the past 9 years I had 70 min commutes one way, now close to 90 min ). I'm planning to RENT my current house which has a great deal of sweat and bubble equity in.
I need advice regarding renting vs. selling my current residence. I'm trying to figure out what the minimum renting amount should be in order to break even (i.e. the monthly cash flow be 0)
Here are the numbers (maybe not be close to reality, but for illustration purposes)
Property value (excluding land) $270k. For simplicity, let's assume the 27.5 year depreciation is 10 k/year.
Outflows :
- Mortgage $2000
- Taxes $400
- Insurance $100
My understanding is that the depreciation and rental income is taxed at your income level. Let's assume income is >100K and tax level is 20%. So 10kyear(depreciation) @ 20% will yield a tax benefit of 2k. => 2000/12 = 166. I'm not sure if there are also other tax advantages as well.
Rental income = Total outflows - tax write-off = 2500 - 166 = 2334/month
Are my calculations off ? I'm looking at suggestions of where to look to get input or what books should I might read -
PS Having a new mortgage will delay my FIRE ! but had to do to spend more time with my two toddlers !
Thank you in advance !
Tzukulika. 15 years to go to FIRE !