Investment properties are popular assets; a lot can be done with them, both in terms of long term, passive incomes and one time payoffs, and real estate is one of the most accessible investment types when you’ve got the capital for it.
However, there comes a time in every home owner’s life when they want to sell on. And when you’ve got an investment property to put on the market, the selling process is going to be a little different to what you might be used to. And that’s why we’ve put together the little guide below.
Decide What You Want to Do Next
Before you sell, for mostly tax purposes, you need to decide why you’re selling and what you’re planning to do next. Because when you sell an investment property simply because you want to leverage the cash gained on another property, you won’t have to fork out as much for the government.
It’ll also help you in streamlining the selling process too. You’ll be able to find a price point much faster, as well as pick the most appropriate estate agent, such as Properties Miami, for your purposes.
Dealing with Capital Gains
You’re going to have to deal with taxes whenever you sell a property, but when you’ve got an investment property (sometimes known as a rental property) to sell on, you’ve got more taxes to deal with than ever before.
Because capital gains tax is there to tax the growth of the investment, and how much it’s appreciated since you first bought it. This tax only occurs when you finally sell, and only counts if you’ve owned for more than a year, so you won’t have to worry about it since the asset has left your hands.
So know the rates before you sell, and you may even be able to take ‘depreciation deductions’ on the property too, as homes naturally deteriorate as they age. However, taking this into account before the point of sale may push the tax bill up at a later stage.
Picking Your Moment
Now that you know why you’re selling, what you want to do next, and how you’re going to deal with any associated taxes, you need to pick your moment right. The current year, 2021, is currently standing as a good time to put a property on the market, with house prices high across the globe and selling periods faster than usual. However, times like these don’t last forever, and you need to be sure you’ve got time to cash in.
Maybe you should watch the market for a while. You might want to work out what it is people want in your area, or how your own finances will fare if you sell now or later. A decision like this is mostly up to personal preference, so above all else, make sure you’re comfortable to sell.
An investment property doesn’t have to be hard to sell, as long as you know what to expect.
