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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: John Vosilla who wrote (42532)10/3/2005 3:57:49 PM
From: Live2SailRead Replies (1) of 306849
 
Two actual real estate items. The first is a series on SV RE in the SJ Mercury News:

mercurynews.com
See the rest of the articles on the right side.

The second is an anecdote from a former colleague about why he kept house #1 to rent out while he bought house #2 for his recently expanded family. Don't know if he'll get burned, I hope not. Also wonder if he'll get snagged by the AMT. Here's his reasoning:

"The purpose of holding on to the old house is two-fold. The first is that it's a valuable appreciable asset. The second is that between the mortgage interest and operating loss, the
tax benefit is awesome. I think next year our *total* tax liability (meaning the amount of income tax I pay to the fed/state) will be about $3000 dollars to the fed and about $500 to state. Basically we get the benefit of an appreciating assest as well as a *huge* tax benefit. It's a double whammy.
Earn more money from asset appreciation and take home more money since I have a negligible tax obligation. *Plus* you can also borrow against the equity in the homes to buy other assests, such as a vacation rental home.

"As long as you can cover the mortgages (via rental or regular income) and have enough left over to live on, it's pretty much an 8%+ year over year investment that generates huge tax savings.

"I should say that the only way this was possible for us was that even though we hadn't paid down that much principal on the first home, it had appreciated to the point where we had a buttload of equity available.
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