Mortgage Question

[aie]

Hello. 

i currently have a mortgage in Arizona. As of December 22,2020 I will have had it a year. 

I live here with my mom and rest of family. 

How do I go about it if I want to move to another state (IL) but continue to pay my mortgage in AZ? What tax penalties would I be looking at? 
keep in mind I do not want to make a profit with the property I merely want to keep paying it but not live in it. 

[xmasbaby0]

Why do you think you would have penalties for not living in the house?  If you keep on paying your mortgage, what do you imagine the problem will be?  

[xmasbaby0]

@aie You said you are not selling the house for a profit.  Are you selling it at all?  It does not sound like you are planning to sell it if you are talking about making the payments.  Are you worried about paying capital gains tax someday if you sell it and it has not been your primary residence for 2 out of 5 years?  

Trying to understand what you are worried about and why you are mentioning "penalties."

[aie]

Hello. Thank you for your response. 
I would like to continue making payments on the mortgage while I live in a different state. 
I know very little of the laws of owning property while living in another state. I just want to know if there are steps I should or could take to make sure I do not do something illegal. 
also would my taxes change if I live in Illinois while making a house payment for an Arizona house? Would this change my loan rates at all?

and no I am not worried about the capital gains I do not have plans to sell before 5 years. 

[aie]

I do not know. However, I know there could be terms of the loan that may require you to reside in the house. 

[xmasbaby0]

Please read your loan papers if you think there is something in your loan that says you are not supposed to move.  

Did you purchase the house as part of some sort of program that requires you to live in the house yourself for some specified period of time?   Like---are you a law enforcement officer who got a good interest rate to live in the neighborhood?

Is your whole family moving out too?  Or will they be staying in the house that you own?  Are you planning to rent it to someone or charge rent to the family members who still live there?  Is there something in the mortgage papers you signed that says you cannot sell or move out (that would be very unusual)?  Really...you are not even asking a tax question and we answer income tax questions here.  

Income tax-wise     ----     here is some information on what happens if you sell the house:

SALE OF HOUSE

If your gain was more than  $250,000 filing Single, or more than $500,000 filing Married Filing Jointly the sale must be reported on your tax return.  Whether you re-invested the gain in to another house is irrelevant.  If you  have a Form 1099-S go to Federal>Wages and Income>Less Common Income>Sale of Home (gain or loss)

If you owned and lived in the home as your primary residence for at least 2 of the last 5 years on the date of the sale, you do not have to report the home sale if the gain is less than $250K filing Single, or less than $500K filing Married Filing Jointly (and you both owned and lived in the home for at least 2 years).

• If you are using online TT, you need Premier or Self-Employed software to report the 1099-S
• .https://ttlc.intuit.com/questions/1901135-i-sold-my-home-at-a-loss-is-this-deductible

[Anonymous]

the other issue you may face is the deductibility of the mortgage interest. you state you have no intention of living in it.  as such it would not qualify as a second residence.  since your family members live in it, if you are not charging FMV rent you will not be able to deduct the interest as schedule E - rental property interest 

[NCperson]

if you are simply moving out of the house to another state (or just across town) and continue to pay the mortgage, the servicer will not charge you any fees or penalties or change the interest rate.   They lent you the money; you signed for it and they expect you to make the payments on time each month - that's it. 

the

Call you mortgage servicer to discuss for your own peace of mind.