rental and refinancing

[Hot dog]

I am ashamed to admit I am a landlord but do not really understand all the taxes and financial stuff that goes along with it. I have looked for books at the library to educate myself and haven't found much. suggestions? Anyway, I was thinking bout maybe refinancing the rental my personal mtg or both. My rental is worth bout 200,000 and I owe bout 50,000 it is on a variable rate mtg maybe 5.5 right now. My home mtg is bout 290,000 worth bout 425,000 rate is 6%. At one time I was thinking get them both down refinance the rental and pay off primary. Is this best? the rate would be higher on rental then primary.I could just refinance them both so rental not variable and primary a little less. I know for fafsa rental would be held against me if paid off. I prolly hv almost enough to pay off in EF and college money saved could use rent instead. What are advantages and disadvantages to either. Is this understandable? Thanks

[jIM_Ohio]

I am ashamed to admit I am a landlord but do not really understand all the taxes and financial stuff that goes along with it. I have looked for books at the library to educate myself and haven't found much. suggestions? Anyway, I was thinking bout maybe refinancing the rental my personal mtg or both. My rental is worth bout 200,000 and I owe bout 50,000 it is on a variable rate mtg maybe 5.5 right now. My home mtg is bout 290,000 worth bout 425,000 rate is 6%. At one time I was thinking get them both down refinance the rental and pay off primary. Is this best? the rate would be higher on rental then primary.I could just refinance them both so rental not variable and primary a little less. I know for fafsa rental would be held against me if paid off. I prolly hv almost enough to pay off in EF and college money saved could use rent instead. What are advantages and disadvantages to either. Is this understandable? Thanks

I would pay off primary residence before paying off the rental.

As for the tax implications of the rental, you can take a free tax course at Jackson Hewitt or Liberty tax (for example) and gain significant benefit.

You should be claiming depreciation and mortgage interest and property taxes on the rental.

Here are some quick references to check on IRS site

http://www.irs.gov/pub/irs-pdf/f8825.pdf

http://www.irs.gov/pub/irs-pdf/f1040se.pdf

[maat55]

You might find this site helpful, I use it for real estate advice.

Real Estate Investing Forums | BiggerPockets.com

[mdcrim]

I would refinance the primary mortgage (Pentagon Credit Union has a 4.375% 30 year fixed with no points). I would take an additional $50,000 out during the refinance and pay off the rental. I would use the rental income to prepay the new mortgage. That's just me, though. Others?

[PMMM]

The variable rate is what would keep me up at night. Interest rates are low right now with no end in sight but things could change rapidly. If you income is enough and steady you might be ok and not sweat the adjustable. I would be nervous of the that.

If your primary does in fact appraise at what you say the I would be tempted to do the same thing that mdcrim suggest which is to suck enough equity out of the primary to pay off the rental then use that income to pay down the primary as fast as you could. This way your adjustable is no more and you have a lower primary interest rate. That would be some decent savings, 6 to 4.375%

PMMM

[jIM_Ohio]

LOL why prepay a rental when you owe on primary residence you live in? I guess some people want high free cash flow, I would prefer to remove the risk the bank takes away the house I live in.