Deciding whether to sell a rental property has become a hot topic over the last 12 – 18 months because the real estate market has had values appreciate significantly. So, a lot of our owners have considered selling, especially if they didn’t want to own that investment property in the first place. This might not be the best time to exit out of the rental market, however, so before you sell, consider all your options.
Should I Sell My Rental Property? Call Your Financial Advisor
You’ll want to talk to your CPA or tax attorney about the potential tax consequences you’re looking at if you sell your investment property. In Georgia, you could pay 21 percent on your capital gains tax, between federal and state taxes. So, it’s something to look at. Make sure that you aren’t spending $10,000 or $12,000 on taxes if you only have $50,000 to earn off the sale. That’s not always the best return on investment.
Should I Sell or Rent: Advantages of Continuing to Own
You’ll continue to enjoy tax advantages when you keep your property and rent it out. There will always be some kind of taxable loss due to depreciation, and other expenses that you can write off. The biggest thing that people miss is that this property is a wealth building tool. You’re building equity, and the credit reporting agencies and your future lenders will love the fact that you own more than one piece of real estate. It’s considered a benefit for you. You also need to remember that you have a relatively safe return and a much higher rate than cash savings. Investing in property is not as risky or volatile as the stock market.
Consider a 1031 Exchange
Many property owners ask about what they should do if their current property really isn’t ideal as an investment property. A lot of times, we’re renting out the former family home, and it isn’t best-tuned for the rental property market. So, you might have a much larger house, a smaller house, a condo, or a property that is not in a great neighborhood. You can do a 1
031 tax deferred exchange if you want to get out of that house and purchase a new one that makes a better investment. We help a lot of owners process their properties and avoid tax consequences while disposing of an asset that isn’t performing so well, and acquiring one that does.
To learn more about this, or anything pertaining to Marietta property management, please contact us at McCreary Realty Management.