Newsflash: capital gains taxes high on rental

I’ve got a house, going to retire early, rent the house out. Bought for 240k, worth almost double. The house is part of my plan for early retirement (wife has her own house).So, basically you can sell a house without capital gains taxes up to 500k for a married couple if you have lived in it 2 out of 5 years. We were looking at renting it for 3 years, then come back, fix it up and sell it. Our other option was to keep it and it would be paid off on 12 years and the area is appreciating a lot about 6% now and continuing unabated due to Puget Sound area factors.We would like to sell it in 10 years or use for rental income, but after 3 years, the capital gains on our 500k house would be in the area of $72,000 (generally speaking). That’s a huge amount of money. Basically, 3-4 years of risk renting it for $2000 a month or so. Crudely put, you have to rent for about 4 years to pay taxes with that large risk.What I’m getting at is that it doesn’t seem worth it to rent it past 3 years. Fix it up and sell it. I must add that we are very risk adverse and have most of our money in stable fund/govt bonds. We do want to retire in 2 years and are not in any mood for a market correction. We just have to have enough to get us to 62 for Social Security / pension for that stable income.So, being an absent landlord, I can’t see any upside to keeping the house beyond a 3 year rental. I was hoping that we’d sell it when it was paid off and have little nest egg there.Sorry any duplicate info/non-concise message.TL;DR: We want to rent our house long term for financial next egg. However, lose about 4 years of rental income due to capital gains taxes.



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