Quote:
Originally Posted by Red
How does that help him pay for the new place?
To quote Seinfeld about Kramer:
"it's easy to not pay income taxes when you have no income"
In the end I think you just re-confirmed what I told CS. Renting the condo out will not help you much, if at all.
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I never once stated anything about how this would help his new place. You said that income taxes would shave 30-40% off your earnings. I have shown you how this is incorrect, which was my point. He will likely not have any income taxes from renting out the place. He won't have any capital gains at this time. All that will happen is he will receive some income, which should cover his cash outflows, and maybe even put a little extra money in his pocket or help out with the living costs of moving in with his girlfriend. No taxes are being paid from any of this at this time or as he continues to rent it out. It will allow him to keep an asset, that hopefully appreciates in value. The goal is to want to pay capital gains, as this means you sold your property for more than you paid for it, and capital gains are only taxed at 50% of the gain, unlike other investments, which the whole amount is taxed.