I have a mortgage on my primary residence. Bought it 12 years ago, 4.0%. Owe right around $200k; current zillow is $585k. The mortgage was just sold and I keep getting mailers (2 or 3 a month) from the new company, trying to snag me in a HELOC - I bet they want that, my rate is so low right now they need to try and make SOMETHING off me!!
I have a rental duplex, free and clear (bought as a foreclosure - stole it for $74k and renovated it with my own 2 hands). Current zillow on it? $274k, with a "- bd" classification (they don't know it has 4 bedrooms to go with the 2 bathrooms).
Rent on the 2 units pays 80% of my mortgage every month (net after sewer, prop tax, and insurance). Gross, it's a wash...but dad was a CPA and taught me the difference between gross and net, so I know to set some aside every month for the (non-escrowed) bills and I keep ahead of it.
I have debated - and am still doing so - selling the rental and paying off my mortgage. However...I'd lose the deductions for both my primary mortgage interest, and the rental property tax and utilities deduction, as well as any associated business expenses (repairs, exterminators, etc). And I'd have to pay capital gains tax on the amount I get from the sale, unless I invest it in another property (and at today's rates, if I can't pay cash for it...I don't think I wanna do that). But, I'd also lose the rent income, so my tax liability would be less.... I have to sit and do the math. The idea of "no mortgage payment" is appealing...but I have to balance the deductions I'd be losing, as well as the cap gains tax, and figure my primary residence prop taxes and insurance as a bill instead of "invisible" escrow...ugh.
I could potentially sell the current rental, pay off my mortgage...and invest the balance in another rental (also thereby eliminating some of the cap gains tax)...but these days, I wouldn't get much for $75k. Hell, I didn't get much for $74k a dozen years ago...but I was a dozen years younger, and the renovations were "easy" and "fun" (and cheap, especially compared to today's materials prices!).
In the end (hate to say it), I'll end up with mom's (free and clear) FL home. She's so ornery though, she'll be with us for another 20 years (she's 87 now)...so I don't bank on that for any of these calculations. But when that time comes, it'll pay for my hundreds-of-acres, ****-the-world, retirement and move to someplace like South Dakota. I can't stand FL - nice to visit, but that's about it for me - and her HOA would NOT like my vehicle collection (and 8 cars / 6 motorcycles aren't fitting in a 2 car garage)....so either it's getting rented, or sold, when the time comes.
