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Expenses to Consider When Selling Investment Property

Updated: Dec 15, 2023

a house selling investment property

Are you considering selling your investment property? Before making a move, it's crucial to understand the costs involved in the process and how it could impact your taxes. Selling an investment property comes with various expenses, including potential capital gains taxes and depreciation recapture. When you plan to sell, here are some essential things to keep in mind to effectively manage the costs. Additionally, we've compiled some valuable tips for selling an investment property to help you maximize your returns and achieve a successful sale.

Essential Tips for Selling Investment Property While Preparing for The Sale

Getting your property ready for sale might require some investment. You may need to handle maintenance and repairs to enhance its appeal to potential buyers. Additionally, investing in professional staging can play a significant role in attracting interested parties.

Understanding the Impact of Capital Gains Taxes on the Costs of Selling Investment Property

The duration of your property ownership will determine whether you encounter short-term or long-term capital gains taxes, an essential consideration when selling investment property. If you're flipping and selling the property quickly, you'll likely face short-term capital gains tax, taxed as regular income. On the other hand, owning the property for more than a year will result in long-term capital gains taxes, with the tax rate based on your tax bracket. It's crucial to consider these potential tax implications when planning to sell your investment property to make informed financial decisions.

Tips for Handling Depreciation Recapture When Selling Investment Property

When owning an investment property, you can claim a depreciation deduction annually on your taxes. However, the IRS can recapture those deductions when you sell the property, subject to varying rates based on different factors.

While selling an investment property has tax implications, you can reduce or defer your taxes. One strategy is to use a 1031 exchange, which allows you to defer capital gains taxes by reinvesting the sale proceeds into a similar investment.

Professional Support for Selling Your Investment Property

When selling an investment property, it's crucial to be aware of the costs involved. If you have any questions or need assistance selling your investment property, contact us today. We understand that navigating the process can be overwhelming, so we're here to provide expert guidance and support.

Check out this podcast to learn about how to utilize debt to create cash flow.

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