Hello everyone! My husband and I are looking to do travel nursing for a few years before settling down and starting a family...but we currently own a house. With the type of loan/mortgage we have on our house (Fannie Mae is our lender and we bought our house under the care one program) apparently we aren't allowed to rent out our house. So that leaves selling. We have always felt that our current house is not our forever house so are fine with selling, however, in our area, houses similar to ours are selling at a price that would make us lose 10-20K. Should we just lose that money and sell anyways? Should we consider a short sale? has anyone ever done a short sale? Any comments/suggestions would be much appreciated. Thanks!
Jul 4, '14
You are better off keeping it than selling now. It will legitimize an IRS "tax home" which is worth roughly $10,000 a year in tax savings for the average traveler. A tax home is something that is also your residence that you can return to at any time without encumbrance so renting your home would not have helped. Keeping your home also means that you (theoretically) building equity with your payments, which will come to fruition when (not if) home prices recover in your area.
However, there may be a legitimate way around this problem. I doubt your lender prohibits others from living with you, so you can do a house share! Just keep one bedroom for your exclusive use (lock it even) to meet IRS guidelines. This has multiple advantages for everyone involved, the housemates will get a killer deal paying for a portion of a house, but getting it 100% private for at least 45 weeks or better a year; you won't have to pay a house sitter, gardener, etc., full utilities (make any mutually agreed on arrangements); and you can get them to sort your mail and forward anything important.
You do need to declare housemate rental as income, but you are itemizing already, right? No big deal and you will come out ahead. Presumably you can get 5 to 10 thousand a year in rent, which combined with your tax savings as a traveler will effectively give you a free house, or close to it depending on your payments, and defer taking a loss on a short sale, hopefully until it is worth at least until your equity can be returned.