One of the most common questions "Brides" magazine gets from readers is how to merge two lives into one household. One house suddenly has to hold two persons' stuff and accommodate two persons' schedules, quirks and different levels of cleanliness. Even deciding which home to live in can become a challenge -- and then comes the question of what to do with the home you didn't pick.
The Market
Your new spouse may be passionate about you moving into her house, but think about whether it's practical first. If you're planning to have kids and you have the much larger home, it may be smarter to sell hers, even if she hates the idea. If you've had to make your home accessible for someone with a disability, keeping it may be more cost-effective than paying to have hers retrofitted. Don't decide to dispose of your house until you're both satisfied it's the right choice.
Profit and Loss
In a boom market, it often makes sense to sell your house rather than continue making payments. In a flat market, it's a tougher call. There's no point in paying the mortgage, taxes and insurance on a house you don't want, but if you sell now you'll get much less than if you wait until the market recovers. Talk to people who know the local market and crunch some numbers to reach the best decision.
Capital Gains
When you sell your primary home -- the one you live in regularly -- the first $250,000 in profit is exempt from taxes. Once you move in with your spouse, your old home is no longer primary. If you sell within, say, the first six months after you move, that's not a problem. After two years, though, the IRS no longer considers you qualified for the exemption. If you wait to sell the government might end up keeping a lot more of your profits.
Weighing Options
If you can't sell your house in the current market, renting it out is an alternative. If you price the rent high enough to cover your mortgage, taxes and other expenses, you break even; if the market lets you charge more, you turn a profit. You can also benefit when tax-time comes around by deducting property taxes, repairs and other costs from your rental income. If you actively manage the property, you can deduct up to $25,000 in rental losses from other income.
