Good time to sell an investment property

Bend, Oregon (OR) · Member since 2017 · 5 posts · 3 votes

I have a house that I wasn't thinking I was gonna sell but got a really big offer. It is cashflowing after paying mortgage about $1750 per month. I lived in it for 10 and bought a new house. If I sell it before April I would not pay capital gains tax on 250k. I have an offer for 625k and owe 279k. After everything might walk with 315k. Of course 65k I would have to pay tax on. This is kinda small little house but does have studio apt and great location. So two rents coming in. Been awesome cashflow even pays my other house full mortgage payment. I feel like we are do for another recession and think selling now could be good. So torn a place that has great cashflow and location or big chunk of change for another project or investment.

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Ryan Butler
MA · Member since 2010 · 14 posts · 6 votes
6y
@Tim Marquess That’s a tough call (great problem to have though). Assuming your rent and expenses remain unchanged indefinitely, it would take 15 years to earn the $315k you’d make from the sale. You’d also be forgoing any future headaches with property.
Of course, the rent would most likely go up by year 15, even in the event of a short term dip. Same goes for home value by the way. Sure it might go down during a recession, but eventually it will be higher; and it might not take as long as you think.
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Theresa HarrisPro Member
Member since 2019 · 15k+ posts · 11k+ votes
6y
@Tim Marquess run the numbers assuming the price of the house stays the same and you sell it 10 years down the road. Would you be further ahead selling it now and buying another rental (or two) or keeping it?
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Basit SiddiqiBusiness Member
Accountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes
6y
@Tim Marquess

I just want to make sure you are calculating the gain by using the appropriate figures.

The figures to calculate the gain are sales price and adjusted basis. The amount you owe has no impact on the gain.
You are correct that you would be entitled to a $250,000 gain exclusion if you lived in the property for 2 out of the last 5 years(and you are not filing jointly).
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