Accomplishing this could require finesse. Some of our lenders, simply will not finance another property if you're upside down on your current property...they won't allow negative equity. A couple other lenders we work with will allow it under certain conditions. They're shooting their industry in the foot, if they allow people to buy better homes and let them walk away from underwater homes/mortgages.
If you have the financial capacity to afford a house, there are fix-n-flip investors that bought and rehabbed foreclosures, who may sell you the house with seller financing, provided you make a down payment. Then after 6 months or 12 months (depending on lender), you could refinance the home and pay off the seller financing loan. This may work because lenders don't like giving financing on properties that have been flipped recently. Once you get into the new house, you can then decide how to maintain your townhome.
Since I don't know your specific situation and am not a CPA, I can't advise you. So, I can recommend you speak with an experienced property investor and get some good advice from a CPA. You can even call the IRS help line to walk you through the rental deductions.
As Terri notes, if you go ahead with a short sale, then you won't be able to buy the single-family home you hope to.
Check with an accountant on what your after-tax losses would be if you rented it out. They'd likely be less than what you're calculating. Rental losses (in most cases, especially if you're renting it at market rates) are tax deductible. That's not accounting advice; check with your accountant. You'd also be able to take depreciation on the property. Depending on your tax bracket and a number of other factors, that $7,200 loss might possibly shrink to $4,000-$4,500. Not great, but perhaps somewhat more bearable.
However, if you rented it out, you might have a problem with your debt-to-income ratio when you try to get a new mortgage. Check with a mortgage broker or lender to get a preliminary idea.
What you might end up doing is renting out your townhouse and then renting a single-family home. That way, you wouldn't have to get a mortgage on your new home and (depending on your market conditions) might actually save you some out-of-pocket cash each month.
You also could try a lease-option on either property . . . or both. Offering your townhouse as a lease-option might boost your rental income a bit--maybe $100-$200 a month. And you might even be able to find a potential buyer that way who'd be willing to pay a higher figure for the property in 3-4 years. As for your single-family home, if you negotiate well, you might not end up paying any more, but you might be able to lock in a decent price if/when you purchase it.
But first check with a lender and see what you might qualify for if you did rent out your current home. And check with an accountant to get a better handle on what that would actually cost you.
Hope that helps.
Owning a home should not be a stressful situation. Arm yourself with knowledge and it will lift the burden off of you.
Hang in there.
If you can lower your payment, then renting may not be a bad idea. If you do rent and it's costing you money, you likely won't be paying income tax on the rental income, however the losses cannot offset your regular income from your other employment.
If you choose to short sale, you may be eligible to purchase with an FHA loan without waiting 3 years, under specific circumstances. HUD Mortgagee Letter 09-52 addresses this issue. Basically:
Borrowers are not eligible for a new FHA mortgage if they pursued a short sale agreement on his or her principal residence simply to
â€¢ take advantage of declining market conditions, and
â€¢ purchase, at a reduced price, a similar or superior property within a reasonable commuting distance.
Borrowers are considered eligible for a new FHA-insured mortgage if
â€¢ they were current on their mortgage and other installment debts at the time of the short sale of their previously owned property, and
â€¢ the proceeds from the short sale serve as payment in full.
With reference to a short sale, as long as you are current throughout the short sale process you can qualify for a FHA loan the next day. But you cannot have had a previous BK or foreclosure on your record. FHA is the most flexible with short sale guidelines.
Hope this helps and good luck!
If you short sale now purchasing in the near future will not be likely.