Owning rental property has its perks: extra income, long-term investment growth, and tax benefits, among others. But what happens when you’re ready to move on?
You might be wondering, “Can you sell a rental property?” The short answer is yes. However, at IPS Cash, we recommend considering a few key factors before putting up that “For Sale” sign.
Can You Sell a Rental Property That’s Occupied?
Here’s where things can get a bit complicated. Selling rental property is doable, but you have to play by the rules. New Hampshire law offers three options:
- Wait for the lease to end.
- Sell with the lease still in place.
- Offer the tenants a buyout
Some buyers actually like having tenants in place, especially if they’re other investors looking for turnkey income. But others will prefer that the property be unoccupied. If someone’s hoping to move in themselves, having to deal with current tenant occupancy might be a dealbreaker.
Watch Out for Capital Gains Tax
Here’s a not-so-fun surprise: Uncle Sam might want a piece of the pie when you sell. If your property value has increased since you bought it, you could owe capital gains tax on any profit from its sale.
You may also be on the hook for depreciation recapture. If you claimed depreciation on your taxes while owning the property, which most landlords do, the IRS might come knocking for some of those tax breaks you claimed over the years.
Can a 1031 Exchange Help?
So, can you sell a rental property without incurring a tax hit?
Here’s some good news: If you’re planning to sell your rental and buy another investment property, you might be able to avoid paying those taxes right away by doing a 1031 exchange.
This allows you to “swap” one rental property for another and delay paying capital gains taxes. However, there are strict timelines and rules to follow, so it’s a good idea to talk to a tax professional before going this route.
What About Selling As-Is?
Of course, not every landlord wants to juggle timelines and tax codes. If you’re thinking, “I just want this property off my hands already,” there’s another route to unloading your rental property now. That’s where cash buyers can come in. They buy properties as-is, even if they’re occupied or require extensive work.
When selling to a cash buyer, you don’t need to worry about paying commissions, closing costs, or extra fees. They’ll check out the property and make an offer, and if you accept, you can close in a matter of days. The buyer will deal with the tenants and address any other issues the property may have.
Are You Ready to Sell Your Rental Property?
If you’re tired of being a landlord and wondering, “Can you sell a rental property?” or simply want to cash out on an inherited property with a mortgage, I’m happy to help. With IPS Cash, selling a rental property in Nashua is simple, fast, and stress-free, whether your place is vacant or still occupied by tenants.
Reach out to me, Joe Theriault, and my team at 888-893-7188 to discuss your options.
