<p>Any ideas about what your sibbling wants to do? Is the unit currently occupied vs vacant? What is the cash flow from the unit? What is your cash flow/asset situation? Your sibs? The basic options are selling it & giving each of you your portion, one person buying out the other, or renting the unit. Everyone has made good points about the pros & cons of the various options. You can pay about 10% or so of gross rent & hire a property manager to rent out the unit & deal with tenants if you & sib don’t want to be landlords but aren’t ready to sell.</p>
<p>As was noted before, not all condos can be rented easily. I am in a similar situation, and our condo can only be rented once per year. You can rent it for the whole year, a month, or a week, but only once. It is set up as a residential building and they do not want renters if they can avoid them.</p>
<p>Also ask your accountant what happens if you rent the condo then a few years from now choose to sell it and it has appreciated in value (or it’s worth more than you paid to acquire it from sib). I believe you pay capital gains tax on the increase in value (whereas with a primary residence you can avoid the tax). But check with your accountant.</p>
<p>First, my condolences on the death of your father.</p>
<p>Regarding the condo decision, you will want to be aware of any State tax issues. Once you move to another state, you will be paying state income taxes there (unless you are moving to one of the states with no income taxes). I believe that if you do keep the condo as a rental and receive rental income in California, you will continue to be liable to pay California income tax on that portion of your income that is earned in California. This will mean you have to file a state tax return in two states (again, assuming you move to a state with income taxes).</p>
<p>Of course, this is just friendly input from a stranger on a college forum. You will want to get professional advice before making your final decisions.</p>
<p>
You will also pay ordinary gains on the accumulated depreciation. Just something to be aware of.</p>
<p>^ Recaptured depreciation has a maximum rate of 25%.</p>
<p>All of these details regarding taxes are best worked out with your financial advisor(s). The bottom line choices are those that you & your relative have to make–do either or both of you want to keep it as an asset or liquidate? What shape is the property in? Does it need repair/maintenance/other? These financial issues MAY weigh into the decision as well, of course.</p>
<p>You’ve been given good advice on two different themes: the problems inherent in buying out your sibling, and the problems inherent in being a long-distance landlord. Both are significant. I suggest you ask your self if you would buy a condo to rent it out if this situation hadn’t arisen. If not, it’s really not a good reason for doing so. (Being a landlord is hard work.) </p>
<p>My advice is this: if you think you want to buy a condo in San Diego and rent it out, fine, but don’t combine that with your inherited co-ownership with you sibling. Sell the condo. Split the proceeds (tax free!) Use the proceeds to work with an experienced realtor to find the best candidate for a rental condo - location, condition, association health, price, cash flow, etc. - and buy it. You may even be able to inherit a long term tenant that way.</p>
<p>But bundling everything together - inheritance, sibling issues, new career as a landlord - just because it seems convenient - is a recipe for disaster.</p>