If you own a rental property and you’re thinking of selling, there are some important factors to keep in mind. In this article, we are going to talk about a few things to keep in mind when selling rental property.
Be Aware of Capital Gains Taxes
Selling a rental property is a lot different than selling your primary residence. Since the rental property is considered an investment property, you are responsible for paying capital gains taxes on the sale. Depending on the property itself, this can be a hefty bill that the seller has to foot – often 20% or more of the sales proceeds.
How to Avoid a Huge Tax Hit
If you are hesitant to sell because of this potential capital gains tax bill (who can blame you?), a 1031 exchange can help you defer your capital gains taxes when selling rental property. With a 1031 exchange, you would take your proceeds from the sale of the relinquished property and reinvest them into a new replacement property (another rental property, or any other investment property that qualifies). This helps you avoid a tax bill and keeps your money working in a continued investment.
CPEC1031, LLC
At CPEC1031, we have more than twenty years of experience helping clients through the 1031 exchange process. Our qualified intermediaries will walk you through each and every step in the process – from planning to closing – and answer all of your questions along the way. If you are selling a rental property in a 1031 exchange transaction, contact our professionals today. Our primary office is located in downtown Minneapolis, but we have satellite offices around the United States.
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
Defer the tax. Maximize your gain.
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