<p>You know what? You might be right. That is one reason I wrote about my parent’s place. I am not 100 percent sure. I think I will explore the renting issue more.</p>
<p>Does the house have to be depreciated? My folks are in a low bracket. Won’t do much. On death, there is a stepped up basis if I remember correctly. Hmmmm. Makes the cap gains tax exclusion less important.</p>
<p>I might rent this place out.</p>
<p>Maybe notrichenough, steveMA or artlover can give you good info on the depreciation. Seems worth checking into, though. Hate to see something sitting empty, but then again, maybe not worth the hassle in this case. And elderly tenants probably wouldn’t give you much trouble, not holding those wild parties. Then again, you never know.</p>
<p>
That could be a deal-breaker right there. It would probably be smarter tax-wise to sell it, let your parents lock in the gain for zero tax, and then buy something else for the same price.
There’s an opportunity cost as well. It is probably owned outright, and after expenses will probably only have a cap rate of 2 to 3%.</p>
<p>The retirement communities here are getting killed. People don’t want to move into them. Some developers are trying to convert them to regular because they can’t sell or rent them, and that is a tough road.</p>
<p>I am thinking one month’s rent to the realtor. Is that right 8000 to get the place ready. That is Painting and carpets. 3500 a year in upkeep. </p>
<p>But maybe the place rents for 1800 a month though. I am not sure. There is a stepped up basis so the cap gains exclusion is not as big a deal. Maybe. Lots of maybes. </p>
<p>I’m going to get a better idea what the rent is. It is going to cost 20,000 to sell the place, and I love the location of the house. My sister should consider the place. People do think differently as we age. She might change her mind.</p>
<p>Prices are crushed in Oakmont. I know this sounds weird after mentioning that prices are crushed, but people do like the place. The place was “worth” around 500,000 once. Maybe a little less. There was a bubble in Oakmont. I think price recovery will be slow.</p>
<p>
Landlord-grade carpet shouldn’t cost nearly that much. You might be able to get away with Spic-n-spanning the walls, they might just be dirty.</p>
<p>What is under the carpet?</p>
<p>I don’t do carpeting any more. Tenants just destroy it. The only building I have with carpet is because I had to rip the hardwood flooring out for a mold remediation. That caused some damage to my soul. 
</p>
<p>You have to start thinking like a landlord. ;)</p>
<p>You don’t have to take the depreciation, but you do have to factor it in when you sell, whether you took it or not. Recapture is required on depreciation that is “allowed or allowable” so it makes no sense not to recapture. However, you can get around that by moving into it for two years before it is sold (so you meet the 2 out of last 5 year rule). But there is another way to do that (though it does require some work). When you sell it, you do a like-kind exchange for another rental property, to avoid capturing the gain. Then at some point you move into THAT home for 2 years, to convert it back to a personal residence. You would need to rent it out long enough to establish that is really was a like-kind exchange, but if you built a couple of years as a rental into your plan, it would be perfectly legitimate. Of course, tax laws could change before then, but… </p>
<p>And of course you have the stepped up basis when you inherit it.</p>
<p>There are cracks in the drywall. I am figuring the cost of the carpets are about 2,000. No hardwood floors in the place.</p>
<p>I don’t really want to be a landord. That can be my brother’s job once a tenant is found. ;)</p>
<p>CTScoutmom, thanks.</p>
<p>
This doesn’t work.</p>
<p>[Tax</a> Help: I have a rental property. If I move into it and use it as my principal residence for at least 2 years, will this avoid depreciation recapture? | J.K. Lasser.com](<a href=“http://www.jklasser.com/askjk/i-have-a-rental-property-if-i-move-into-it-and-use-it-as-my-principal-residence-for-at-least-2-years-will-this-avoid-depreciation-recapture/]Tax”>http://www.jklasser.com/askjk/i-have-a-rental-property-if-i-move-into-it-and-use-it-as-my-principal-residence-for-at-least-2-years-will-this-avoid-depreciation-recapture/)</p>
<p>In addition, the capital gain exclusion loophole has been closed for rentals that are converted to primary residences. You now can only exclude an amount of gain equal to the percentage of time you have used it as your primary residence since you bought it.</p>
<p>[Tax</a> Help: Nonqualified Use and the Home Sale Exclusion | J.K. Lasser.com](<a href=“http://www.jklasser.com/articles/nonqualified-use-and-the-home-sale-exclusion/]Tax”>http://www.jklasser.com/articles/nonqualified-use-and-the-home-sale-exclusion/)</p>
<p>Okay but if interest rates stay down awhile longer and employment improves then won’t the folks start buying instead of renting? Oh. I see - then you just sell the rental in a sellers market.</p>
<p>Maybe I should think about this.</p>
<p>Ok…thanks notrichenough.</p>
<p>Do you get different homeowner’s insurance if you are a landlord?</p>
<p>It is somewhat different because you aren’t insuring your personal possessions.</p>
<p>In MA it is called a “Fire and Dwelling” policy. In addition there are some state-mandated things you have to have to provide a little protection to tenants in case they have to move out due to a fire or whatever. It doesn’t cover their personal possessions, I think it covers temporary living expenses or something like that. </p>
<p>You’d want to crank up your liability coverage too.</p>
<p>
Read this thread again. Then we’ll talk. ;)</p>
<p><a href=“http://talk.collegeconfidential.com/parent-cafe/1312810-landlords-stories.html[/url]”>http://talk.collegeconfidential.com/parent-cafe/1312810-landlords-stories.html</a></p>
<p>Being a landlord is a hassle unless you are handy and Home Depot is your favorite store. If you wish to have exposure to the RE market, just buy REIT index fund or ETFs.</p>
<p>^ By the time I retire my RE will be paying me 30+% per year of my original investment in income, and will be worth 4-5x my investment, hopefully more of both.</p>
<p>Can I get that from a REIT?</p>
<p>PETAX’s 3 yr return is 30.7%</p>
<p>The yield’s on reits have collapsed. Not to many people seem to care…but I think it will be an issue some day…</p>
<p>Notrichenough… You’re a landlord and you’re telling me to think twice. 
I reread the thread on your suggestion. I read one of Munchkin’s posts and thought it was moving and didn’t realize I commented on it before.</p>
<p>I haven’t committed to anything. There is a chance a tenant would die in the house. I have contacted an agent and I am waiting for a response. I asked questions about renting the place out and I received an auto-reply email that said I was going to receive a report on “selling the place”. :)</p>
<p>My parents are living with negative cash flow. If my folks can net 10,000 to 15,000 a year renting the house, that is money I might not have to come up with someday. ;)</p>
<p>“The fund seeks to achieve its investment objective by investing in real estate-linked derivative instruments backed by a portfolio of inflation-indexed securities and other Fixed Income Instruments.”</p>
<p>Does this even count as being invested in real estate?</p>
<p>Looks like 3 years is an advantageous reporting period. Go back 5 years, and it is 9.1% or 12.5% depending on where you look. Not bad, but…</p>
<p>It also means that 4 and 5 years ago, it returned -30% total.</p>
<p>That’s pretty volatile.</p>
<p>I was hoping you wouldn’t notice that. 
That’s why I kept it to 3 yrs.</p>
<p>When I talked reits, I am talking reits that invest in real property.</p>
<p>I have no idea what Pimco is doing with the security that Krlillies mentioned.</p>