Pay off house and keep it as rental or sell it to take advantage of capital gain

Pay off house and keep it as rental or sell it to take advantage of capital gain
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#1

I need advise on two questions.

  • Should I pay off mortgages on the house rather than keeping money in the bank.
  • Should I keep the house as a rental property or sell it to avoid tax on captial gain?

Really appreciate the advise


#2

Hello and welcome! Most people have better things to do with their money than pay down a low, fixed-rate mortgage. I would only do that after maxing out retirement contributions, paying off all other debt, saving a fat emergency fund and making sure I had adequate insurance.

If you’ve crossed all those tasks off your list, however, than paying off the mortgage can make sense. Most people don’t get much if any tax break from mortgage, and the return on your money in the bank is much lower than what you get from paying off the mortgage.

As for selling versus renting, a lot depends on how much stress you can tolerate. Being a landlord can be a pain. Some people find it to be an excellent way to make money, while others prefer to invest elsewhere. Your stock portfolio will never call you in the middle of the night to demand you fix the furnace, after all.

Hope that helps. If you have any follow-up questions, please fire away.