Rental and Home Mortgage Payoffs
We own an apartment building in which we have $200,000 equity after paying off the loan. We also have a $100,000 mortgage left on our home. We have been getting hit with IRS taxes because we have had the rental for so long and have used all our depreciation. Should we take out a new loan on the apartment house to pay off our house? How would that affect our IRS taxes?
Terry Says
Oh gosh, I really think you need to consult a CPA for the best strategy on this. First thing, if you have a low-rate mortgage, there is no point in paying that off for your home. But selling — or even better, doing a like-kind exchange — might be a strategy for dealing with that depreciation, assuming you have long-term capital gains. Again, you need a pro to go over the specifics of your situation.
