We are currently living in a condo (own) and are planning to buy a house. Our first renewal is in july. FMV of our condo today would be around 420k, and we have 90k left on the mortgage.
I have a few questions on a couple of different scenarios and hope you can help us out:
Here are the parameters:
- Say the value of the house is around 900K. Our principle property will be the house.
- We have 50K that we can use in scenario #1 below as part of down payment for the house.
1. Scenario 1: Refinance the condo and put it on rent. Extract the equity and pay 20% down on the house.
- So, say we refinance for 220K (at 2.30% for 5 years variable); payoff the existing mortgage on the condo (90K); and pay remaining 180K (20%) down on the house (130K+50K).
- Rent on the condo (conservative figure): $1900
- Maintenance fees + mortgage (P+I) + property taxes = 776+964+190 = $1,930
- Q: In this scenario; can I get tax deductions off the interest/condo fees/taxes off the refinanced mortgage on the condo?
2. Scenario 2: Sell the condo, buy the house with 20% down; and use the rest to buy an investment property at a later date and put it on rent.
- Q: In this case as well; would we be able to get tax deductions off interest/condo fees etc?
In general; does keeping the existing condo makes sense? Or should we sell it irrespectively? Is there any scenario under which we will get tax deductions when keeping the existing condo?