I have to relocate for residency- what to do with the home I currently own?

[dermabond]

Hello,
Does anyone have any advice? I am married and my spouse and I currently own a home and will be relocating for my residency.

I am not sure if we should sell our current home and buy a new home in the town of my residency. (I'm not sure if this is even possible as our home has decreased in value and the only option would probably be a short sale.)

Another option is to rent a place in the town of my residency. In this case we would have to simultaneously find renters for our property.

Thanks for any insight.

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[illegallysmooth]

Hello,
Does anyone have any advice? I am married and my spouse and I currently own a home and will be relocating for my residency.

I am not sure if we should sell our current home and buy a new home in the town of my residency. (I'm not sure if this is even possible as our home has decreased in value and the only option would probably be a short sale.)

Another option is to rent a place in the town of my residency. In this case we would have to simultaneously find renters for our property.

Thanks for any insight.

Well, you pretty much laid out your options right there. I would have a pro appraise the house and see what you could get for it, and if it's too much of a hit to your wallet then go the renting route. Do you plan to return to this town after residency?

 

[dermabond]

It's a possibility that we will return to this home after residency but not likely. I'd like to start a family in the next few years and move into a larger house after residency.

 

[dotdash]

We were in this position a year ago, and we sold the house. While it wasn't a short sale, it did hurt to sell it at the price we got for it. But frankly, I think we did the right thing. If you keep it and rent it, you will be a long-distance landlord, so you will have more maintenance costs and more hassles than if you lived there yourself. Also, if you don't move back in later, then there are tax implications to any capital gains you might make on an income-producing property. (Check with the IRS here, I think you have to have lived in the house for 2 of the 5 years before you sell it in order to qualify for the exemption from capital gains tax. )

 

[Daddywarbucks]

As for the rent option it has some plus side to it. You need to find an honest real estate manager to handle the property for you. They pick-up the rent for you and see to the maintenance for you. You get several breaks also and it gives you three years to sell if you choose too. The earlier post was correct in that you have to live in the home at least 2 of the past 5 years, but don't have to be consecutive years example you live in the home year 1 and year 5 = no capital gains tax. You have a good supply of renters who will need a home for at least 4 years to go to med school and have a stable income. This all depends on your mortgage payment. Oh well something to think about. Good Luck

 

[Mutterkuchen]

The earlier post was correct in that you have to live in the home at least 2 of the past 5 years, but don't have to be consecutive years example you live in the home year 1 and year 5 = no capital gains tax.

This assumes that you have a capital gain on the house, which the OP indicates that he does not.

 

[dpmd]

My husband and I were lucky to have purchased a property during med school that was in a desirable location for med students as well as anyone working at the med school or med center. We also lucked out on the mortgage and associated costs being reasonably covered by rents in the area. Now this was my plan when we bought it (before the market went to ****, I thought of that kind of stuff anyway). When we moved for residency we advertised at the school and got a couple of med students to sign a one year lease, and rented at the new location for about a year or so. I offered a little lower rent in exchange for a lease renewal well in advance each year (around april or so, that way I could prepare to try to find new renters if not). On our taxes I have been showing a bit of a loss, but I haven't really noticed it in our finances-not sure what that is all about. I didn't get a property manager and it has been working out ok so far (we are only 2 hrs away, so if needed one of us could get down there to take care of something-if you are going to be far or just don't want to deal with calls about the plumbing in the middle of the night it might be worth it to pay someone).

It has worked out well enough that we even bought a place where we are now (a risky move, but prices are low right now mortgage plus costs is pretty close to the apartment we were renting and now I have one more bedroom-for the pets ) and a yard-again for the pets). The plan will be to try to rent it when I leave (again picked a location near the hospital so I have a pool of people that ought to be reliable tenants), but I made sure we would be able to cover both mortgages if we didn't have tenants (on my salary or his alone we would then either have to live in one of the places, or rent a very cheap place if we need to be somewhere else-with two salaries it's much better even if I am not making tons of money).

Try to see what sort of rent you could get for the place versus how much you would lose in a sale. I would guess a short sale is bad for your credit (unless you make up the difference I guess). Even if you lose some money every month it might still work out to your advantage (assuming your finances allow you to cover those losses) and if the market picks up you could try to sell later.

 

[ArkansasRanger]

Hello,
Does anyone have any advice? I am married and my spouse and I currently own a home and will be relocating for my residency.

I am not sure if we should sell our current home and buy a new home in the town of my residency. (I'm not sure if this is even possible as our home has decreased in value and the only option would probably be a short sale.)

Another option is to rent a place in the town of my residency. In this case we would have to simultaneously find renters for our property.

Thanks for any insight.

I think you should rent the home you own out, and use that money to pay for your rent in another town. Come up with a written lease though. You don't want to move back some day into a pile of torn up garbage. Make sure the tenants are responsbile for damages they incur.