2 premises that you are making that I do not agree with.

1 the rule restriction pertains to you, I don't believe this to be true at this point in time.

2 you can't find a new tenant who will pay timely and consistently.

Do your due diligence, background check, check for lawsuits on your own here:
https://cms.collierclerk.com/cmsweb#!/

tell me is the an HOA or Condo

I would say a reason to NOT sell it is that you have a good reliable tenant, and assuming the rent is covering your mortgage and expenses, you are paying off an appreciating asset. “Fair market rental” is a red herring in this situation. We’re you happy with the situation before you heard about rates going up? If you had never heard about increasing rates, what would your decision be?

The only reason I see to sell is that you can do something substantially better with the after tax proceeds of the sale.

quote:

Originally posted by the_sandman_454:

quote:

Originally posted by bubbatime:
Dear renters,

As you are probably aware, rental rates have skyrocketed. Since you have been excellent tenants, we have kept rates low. We completed a market analysis on the property and we believe we can rent the place for $1700 per month. You are currently paying $900.

At the next renewal we will be raising the rent rate to $1200. This is well below market value.

The only downside to that is if the current renters decide to or threaten to leave, knowing you can't replace them, you'll potentially drop from $900 rental income to $0 rental income.

They are probably aware they can hold you hostage a bit knowing you can't replace them at this time.

If the market rates are accurate, where would a tenant go to get a comparable place to rent for $900? If that tenant threatened to leave, I'd call that bluff in a second.

A word of caution, however, is that listing prices/rents are not "market rate". It's like eBay--you don't look at auction prices, you look at the closed sales.

I'm in the don't rock the boat camp. I don't know what your monthly expenses are on the property, but you have a reliable $1750 coming in a month. You've basically got someone paying for real estate for you, and with the way the market is right now that's a pretty sweet deal. I think I would be tempted to raise the rent to make sure all expenses are covered, but having a reliable long term tenant is probably worth more than the money you are missing out on at the market rate.

quote:

Originally posted by DJ_Boston:



We have had the FL property for 7 years, and have not set up depreciation on it, which should ease the tax picture with regards to a sale.


Dan

The rule on depreciation is "Allowed or allowable" which means on sale your tax basis is reduced as though you had deducted it whether or not you did.

On your point about living in the Maine property, be careful. In order for it to meet the exclusion of gain on a residence rule, it must be your primary residence for two out of the five years ending on the sale date, anything less is a pro-rata exclusion. Key is "Primary Residence" (to the exclusion of others). And, recapture of depreciation may still apply.

quote:

Originally posted by Aeteocles:

quote:

Originally posted by the_sandman_454:

quote:

Originally posted by bubbatime:
Dear renters,

As you are probably aware, rental rates have skyrocketed. Since you have been excellent tenants, we have kept rates low. We completed a market analysis on the property and we believe we can rent the place for $1700 per month. You are currently paying $900.

At the next renewal we will be raising the rent rate to $1200. This is well below market value.

The only downside to that is if the current renters decide to or threaten to leave, knowing you can't replace them, you'll potentially drop from $900 rental income to $0 rental income.

They are probably aware they can hold you hostage a bit knowing you can't replace them at this time.

If the market rates are accurate, where would a tenant go to get a comparable place to rent for $900? If that tenant threatened to leave, I'd call that bluff in a second.

A word of caution, however, is that listing prices/rents are not "market rate". It's like eBay--you don't look at auction prices, you look at the closed sales.

If you're threatening to raise rent to $X, the renter won't need to find a comparable place for $900, but for whatever the increased amount you're asking will be, which will be closer to "market rate".

Without knowing the motivations of the current renters, it's impossible to predict what they'll do, including happily downsize to a different property to keep the rent similar.

My only point was that you should be prepared incase the renter actually does walk away and your rental income goes from something to nothing until you can get the HOA thing sorted out.

If you decide to sell AND if you want to continue to have a rental property, then you definitely need to look into 1031 exchanges. This would defer your capital gains until you either sell the final rental property, or you die, and under current law the property gets a "step up in basis" on the death of the first of a couple to die. "Swap 'til you drop" is the slogan for this activity.

Biden wanted to do away with 1031 exchanges and the step up in basis, but that hasn't happened--YET.

You could really take advantage of current tax laws by doing a 1031 exchange.

BTW 2 years after doing such an exchange, you could move into the new property and make it a personal residence, without paying the capital gains tax (until you sell the property or die).