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Selling An Investment Property?

Started by Leigh, September 12, 2018, 04:55:13 AM

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We have a rental property one hour away, that has essentially doubled in value over the past 6 years. ($180k purchase price to $360k value) If we sold today, we would walk away from closing with about $200K.

I could find a nice rental in my hometown for equal rent, and lower property tax, for about that much. So it wouldn't be leveraged.

My question is about the capital gains tax. The 1031 exchange seems to say I would have to buy a house of equal value. Since I don't want to have a mortgage on the next house, how would this all play out? We do have six years of depreciation that would be recaptured of course.

I guess my main question is would waiting until retirement be an advantage over doing it now? We would be in the 15% cap gain range without qualifying for the medicare tax. Thoughts?


When is retirement? And where is the property located?  How long has it been a rental?




 Three years from December. Had the house since June 2012, and it is near Atlanta. I will add this. This particular neighborhood. I would expect to get multiple full-price offers on the day I list the house. It's just how things are there. I want to make a good decision.

I did speak with my CPA and he walked me through ideas. I think knowing the next rental house and having my ducks in a row ready to roll is key.

Money Ronin

With regard to the 1031 question, this is what I've been told.  Everything has to larger on the new property, i.e., larger value, larger mortgage, larger equity--otherwise some portion of it the transaction will be taxable.  Let me know if you find out anything to the contrary.  This article indirectly covers the what I wrote:


I personally own all of my SFH rentals in South Forsyth County which I consider "A" class assets in the northern suburbs of Atlanta. Atlanta's market lags the SoCal and the Bay area real estate market by about 15 months. : SoCal housing market is already slowing.

You will do a 1031 exchange in order to defer both the depreciation recapture and capital gains tax. The challenge with a 1031 exchange is that you will need to identify the property you would like exchange within 45 days and make the exchange within 6 months and maybe exchanging your higher priced property for two more higher priced properties. However, if you are exchanging from a "C" class asset to an "A" class asset it may make sense as the "A" class asset SFH will fall less during a downturn. Some investor 1031 exchange into Delaware Statutory Trust, however I am not big fan of DST and crowdfunding because as a limited partner, you are a passive investor with no control over operations whereas a real property owner, you are fully in control.