Should I sell my house back home?

[sirineou]

I am 61 years old , have being married to my Thai wife for over 10 years and and together  longer than that. We have build and own our own home  and car in Thailand  , have being spending a few months there every year and plan to fully retire there next spring.  (both US citizens , wife holds dual US, Thai citizenship)

  I have always advised those who retire in Thailand not to "burn their bridges" with back home, and leave a way back should situations change , especially as we get older with all the associated old age problems.

  I don't really need to sale the house to finance my retirement, I will be coming out with a good pension from my trade union, social security  and a six figure 401K.  but from a management and financial point of view   would it be better to get a property management company and rent the house ( should get $1400 per month rent, minus management fees, property taxes, and maintenance. insurance ),  if I kept and rented it, it would always be there available to me after the lease contact expires, and should   increase in value keeping pace with inflation.  

OR   

would it be better  to sell it, invest the principle in a safe ETF . ( the return at 6% should be similar to rent, if such return can be maintained,  and principle will double with in 12 years at 6% interest reinvested)  I will not have a place to return to it if conditions required it, but I will have liquidity, could always rent something if I needed to return, and could use the available funds to self insure eliminating the preexisting conditions problem with health insurance in Thailand and would be a lot easier to mange the fund rather than a rented home. 

   Just thinking out loud and wondering what you all think about that.

[Crossy]

If the property can generate a reasonable rental income then rent it out, use an agency to collect the rent and manage maintenance.

[BuckleUp]

Returns in the market are not guaranteed, during the year when you draw funds there may be a downturn. My preferred strategy would be to keep the house, put the rental income into ETFs. That way in 10 years, you'd have both a house, and sizeable portfolio.

 

 

[sirineou]

1 minute ago, BuckleUp said:

Returns in the market are not guaranteed, during the year when you draw funds there may be a downturn. My preferred strategy would be to keep the house, put the rental income into ETFs. That way in 10 years, you'd have both a house, and sizeable portfolio.

 

 

 That is an interesting idea that i had not considered. I provides for  some liquidity , the home availability should a return home be required, and a hedge against inflation.  

Thank you

[loong]

If you rent it out, see if there is any insurance available to cover damages by tenants. Make sure that the management company will require references for the tenant.

I've had tenants do more damage than can be covered by the total rent that they have paid.

[scubascuba3]

Renting is a good idea if easy to rent in your area, tenants can be a pain in the arse, i have PITA tenant right now. Maintenance costs will be higher than if you were there. As for investing in ETFs, depends, markets are high at the moment, so could go straight down so tread carefully

[thaiguzzi]

Keep the house and rent it out.

Bricks & mortar is always better than money in a bank.

[1FinickyOne]

Anything with finances has risk to it... the phrase "burning your bridges" is not one I particularly care for... you are selling a house, not preventing a return...

 

Each plan takes some risk. I don't expect that you can be assured of 6%. Best is to diversify your portfolio... With stocks, you have a larger risk but there are risks with renting property too... management companies are often wonderful, until they have to do anything. Tenants can be a nightmare. 

 

I would take out a pen and paper and make a list of plusses and minuses... real estate is a market too and can go up and down... and property taxes go on... 

 

One of the larger factors in the equation for me personally was "PEACE of Mind" 

 

Lots to consider including how much you think you might miss being back... 

[Muhendis]

3 hours ago, BuckleUp said:

Returns in the market are not guaranteed, during the year when you draw funds there may be a downturn. My preferred strategy would be to keep the house, put the rental income into ETFs. That way in 10 years, you'd have both a house, and sizeable portfolio.

 

 

Agree with this totally especially if the rental income is fed into the portfolio at favourable times.

[4MyEgo]

The first thing I would do is talk to a qualified tax accountant and or look at how your country will tax you and your property, I am not familiar with the US tax system but in Australia it goes something like this:

 

Once you are out of the country for more than 183 days your residency status changes to a non resident, although your citizenship does not, so this means that as you are no longer a resident of Australia, you are no longer taxed as an Australian resident, therefore you would fall into the non resident tax category, meaning whatever tax threshold there was for you as an Australian resident, i.e. ($18,200) before you paid any tax, it no longer would apply and you would therefore be taxed 32.5c in every dollar you earn from Australia, plus CGT Capital Gains Tax would be applied to your property at the same rate, i.e. any increase from the date you left would be taxed at 32.5%, and that is all changing come 1 July 2019 to full CGT.

 

If the above applied in the US, would suggest you sell, as I know for non residents of Australia if you invested in their stock market, there is no tax applicable on fully franked shares, or capital gains tax CGT, therefore making it worth while selling property and investing in the market.

 

Apart from the above I would look at getting a good health insurance for Thailand.

 

Enjoy your retirement.

[RickTik]

Time is the most precious asset you and your wife have.

Get rid of the house so you don't have to worry about it.

Keep some cash in the USA as a backup.

Enjoy your senior years with your Thai wife.

Devote that time to enjoying your marriage, your life, Mother Nature, and wherever you guys decide to live.

 

[baansgr]

Financially it could be better sometimes. I was lucky sold mine in UK day before the crash. Life events change and for me I wish I had kept my property. To have a base in your home country as a bolt hole in case of emergency or other reasons. Could you downsize? I'm seriously  looking now at purchasing a small apartment just as a residence,  no intention of renting. Of course a lot depends on tax implications etc and I don't know what they are in US but definitely beat to have somewhere 

[IAMHERE]

Why would you return to USA?  Probably for health reasons. Is that house near the medical facilities you'd most likely want? If so then sure, keep the house. On the other hand do you want to do the upkeep and maintenance on that house while you are sick?  

The bridges you speak of are mostly directed at poor people, not you and your spouse.  The money you have is your bridge. Sell the house and enjoy, don't have a few drinks and wonder how your house back in the USA is doing.  Besides, you don't want the extra tax headache.

[lvr181]

NO NO NO!

 

Be aware of the risk (political) of living in another country! The Kingdom is nowhere near that of a civilized western nation. Sad to say - but that is reality!

[Audragon]

1 hour ago, 4MyEgo said:

The first thing I would do is talk to a qualified tax accountant and or look at how your country will tax you and your property, I am not familiar with the US tax system but in Australia it goes something like this:

 

Once you are out of the country for more than 183 days your residency status changes to a non resident, although your citizenship does not, so this means that as you are no longer a resident of Australia, you are no longer taxed as an Australian resident, therefore you would fall into the non resident tax category, meaning whatever tax threshold there was for you as an Australian resident, i.e. ($18,200) before you paid any tax, it no longer would apply and you would therefore be taxed 32.5c in every dollar you earn from Australia, plus CGT Capital Gains Tax would be applied to your property at the same rate, i.e. any increase from the date you left would be taxed at 32.5%, and that is all changing come 1 July 2019 to full CGT.

 

If the above applied in the US, would suggest you sell, as I know for non residents of Australia if you invested in their stock market, there is no tax applicable on fully franked shares, or capital gains tax CGT, therefore making it worth while selling property and investing in the market.

 

Apart from the above I would look at getting a good health insurance for Thailand.

 

Enjoy your retirement.

Hi I FME, Does this apply to Australians of pension age over 65.5 years? My accountant said I had a 2 year window to live in Thailand, rent my house without penalty tax being applied. I would have no other income apart from the rent. Thanks for your help.

[4MyEgo]

14 minutes ago, Audragon said:

Hi I FME, Does this apply to Australians of pension age over 65.5 years? My accountant said I had a 2 year window to live in Thailand, rent my house without penalty tax being applied. I would have no other income apart from the rent. Thanks for your help.

Hey mate, I believe it applies to everyone who has moved overseas and is a non resident for tax purposes.

 

The best advice I can give you is to make contact with your accountant to clarify after you have read the link below, that said, if you are an Australian resident, I do not believe it applies to you, again, best to always check with your accountant as I know of a mate who just returned to Thailand after having sold his house, now to give you an idea, he is a non resident and has been living here since 2000, yes he will be up for capital gains tax on the sale, but he wasn't going to hold onto it after 1 July 2019 because he worked out that his capital gains tax was going to be a hell of lot more than what he has to pay pre 1 July 2019.

 

Sorry to be the barer of bad news, but sometimes it can work in your favour if you get out earlier.

 

https://www.bdo.com.au/en-au/insights/tax/articles/foreign-residents-and-cgt

 

Best of luck

[MadameM]

I just burnt the bridge a couple of months ago. I'm 61 and just retired because of my concern about my husband's declining health. It's a very tough decision after 25 years in that loving house, but has to do it. Sincerely, the US healthcare is becoming more and more unaffordable. We were thinking about renting out the house, but we're afraid of the worrisome following putting our house in the hand of property management. I'm not comfortable doing thing that I can't have a full control.

 

During 25 years in the US, I've rented out my house in Bangkok and experienced first hand the trouble from expecting extra income without my own overlook. The fixing, maintenance, the late payment -- to not pay at all. The money from the rent hardly covers the expenses. So, be it! After 25 years, that house is to be demolished. I hope the teakwood floor and stairs survive the rental abuse and can be reused.

 

My husband and I come to the point that -- how much is enough -- to enjoy our peaceful retirement. We realize that we can live comfortably out of our pensions that also covers something I consider luxury such as having a home-healthcare assistant living in with us in order to provide care for my aging husband; spending a month or so a year at some vacation home in Hua Hin, Bang Sarae, or anywhere we want. We take out part of the money from selling the house to build our little house in Thailand and invest the rest in the US. ENOUGH! is the basis to our decision - to sell the house in the US.

 

We still keep our residency in California, though. We burnt our bridge, but won't burn the tie with the US for many practical reasons.There are several  third parties that handle our mail and give us an address for $10 to $20.- a month. This physical address is what I've learned from several posts in ThaiVisa. Can't thank you guys enough! Having talked to the tax guy, I don't need to pay CA tax for having the physical address. The State may inquire you; you just explain that the address is merely for receiving mail. You, yourself, are no longer live here. But sure do with the Fed tax!

 

Everybody's needs and prospects are different. So, the choice is yours to decide.

Good luck on your retirement!

 

 

 

 

 

[JerseytoBKK]

What state is your property in? Makes a big difference. 

 

I'm in the process of fixing up my house and will sell it in the spring. Reasons are: house is in NJ which has very high property taxes so any months it's not occupied carry high costs; house has a septic system that can be easily damaged by careless renters resulting in a $10K+ bill; NJ is one of those states which has strong renter protection laws which makes it very hard to evict people and scammers know this and know how to work the system. Between high property taxes and state income taxes, people are going to get squeezed with the new tax law  in high tax states like NJ, where real estate prices have been slow to recover from the 2008 crash. My house is now worth only 5% more than it was at the height of the boom in 2006. 

 

I don't want to risk being out 6-9 months rent, legal fees and have to repair a trashed place when earning 4-5% elsewhere is relatively easy. The S&P 500 has an average of 10% return per year over the last 75 years. Even if you invested just before the 2008 crash, you'd have a very healthy return 10 years later. 

[BritManToo]

6 hours ago, sirineou said:

Just thinking out loud and wondering what you all think about that.

If you don't need the money to live on, I would rent it out.

You can always sell it later.

[Ooladolla]

Keep your home in the USA, as to renting it out ' up to you ' .

 

[jvs]

If you can find a good rental agency that is the way i would go.

No one can see in the future but one thing is for sure,if you have a bunch of stocks that go bad you have a pile of paper.

If you have a house that is worth nothing you can still live in it!!

 

[55Jay]

I would keep it/rent out - taxes/headache factors notwithstanding.  Thailand may lose its shine once you're living here on a permanent basis and as you get into your 70s, you may have a change of heart, perhaps desire to seek medical care in the US vs. Thailand.    You don't need to the money so after expenses, toss the monthly proceeds into the portfolio and dollar cost average your way ahead until you come to the next way point.  You can always sell later as/if the situation requires.

 

If it were me in that scenario, I might want to keep the house in Florida (thought you have 2 - NY and FL) to avoid slogging it out in the snow at an advanced age. 

[khunPer]

7 hours ago, Crossy said:

If the property can generate a reasonable rental income then rent it out, use an agency to collect the rent and manage maintenance.

I agree with Grossy, if there are no taxation to hold you back from selling your house – i.e. in my Scandinavian home country it's a tax benefit to sell all property and check out – investing in funds or bonds are not secure, both market and dividends can change; and if you should need to return back, your "investments" might not be able to buy you another home at that time.

 

And as you don't seem to need any outcome from your home – and you already has a house in Thailand – do you could invest your net revenue in the EFT you are considering.

 

I think that those – of us – that sell our house back home, apart from tax reasons, is because we need the savings from the property to get a new home in Thailand, and/or savings to live of, or to top-up a smaller retirement pension.

?

[micmichd]

3 hours ago, lvr181 said:

NO NO NO!

 

Be aware of the risk (political) of living in another country! The Kingdom is nowhere near that of a civilized western nation. Sad to say - but that is reality!

I'm German, and Germany is far from being in a stable situation. I would sell my house before the government can confiscate it and give it to those on welfare.

[Sprigger]

Listen to your own original advice. Never burn your bridges 

[Sprigger]

32 minutes ago, micmichd said:

I'm German, and Germany is far from being in a stable situation. I would sell my house before the government can confiscate it and give it to those on welfare.

Blame Mama Merkel for that, you put her in power.

[oldrunner]

After the demise of my wife, young adult children one in College one in the Service, I sold our home, barely cleared mortgage, came to Thailand 36 years ago, met Thai wife and 36 years later continue to enjoy a Thai life, albeit a bit more sedate.

Edited August 6, 2018 by oldrunner
grammar

[Wake Up]

I sold my house. I have a friend in the rental business and he always said if you have one or two properties then don’t rent them. One bad tenant  in the USA with USA bankruptcy laws and you could lose a lot of time effort and money to evict a bad tenant. I understand it may make sense to rent in Australia and England but one house in USA you are taking a real risk to rent it and you are 9000 miles away if a problem occurs IMO. Invest the sales proceeds in Berkshire stock and have no upkeep expenses and the stock will probably appreciate in value tax free until you sell the stock. Good luck. 

[Lacessit]

It's a difficult decision. One option is to sell a big property and downsize to a low maintenance smaller property, such as a townhouse or apartment.

I found selling my larger property worked really well for me, because I no longer had the headache of maintaining it, as well as freeing up a chunk of capital.

[moontang]

SRET, IRT, IGR are three REITS that pay good div...Five bucks to sell....only if the house is on some very prime land would I consider holding it, and I would rent it out at a triple net lease...goog le it....renters are pigs.

 

Excluding principle and interest, 40-50% of annual rent will be needed to cover expenses.  H OA Fees and taxes can be outrageous in the US.

Edited August 6, 2018 by moontang