Am I safe to sell properties now and at current capital gain tax?

4 Replies

Hi everyone, I currently own 20 properties and am considering selling about half.  Am I safe to sell now and remain under current capital gain taxes or is there the possibility of taxes going up and any property sold this year could be grandfathered into the higher tax bracket?  I appreciate any insight that you guys may have on this. I know there are a lot of very knowledgeable people on here! Thanks!

Howdy. It'd be even better to sell a property and 1031 exchange into something bigger so you can avoid capital gains. 

Though if you're only looking to sell and have no interest in buying then yes - it's probably a good time to sell from a long-term capital gains percentage as well as the fact the market is hot (due to these low interest rates that will certainly rise).

You could do seller financing and spread the gain out over alot of years instead of taking the 20% hit as well, which could end up saving in the end with a stream of income. I think it is best to 1031 though if you plan to buy larger properties but if you just want out talk to your accountant or do some research on seller financing and deferring capital gains tax. 

@Justin Clark , The tax code for 2021 will not change.  And from the way it looks theres enough Gridlock in Washington to slow down a watch factory.  Thank Heavens.  As Gideon Tucker said - "No ones person property or liberty are safe while congress is in session."  But if we can keep them fighting each other they may not have time to damage us too much.

So I wouldn't worry about sales this year.  But there are some very interesting things you could do to minimized even more the tax bill depending on what you sell and your goals.  If you're not averse to doing a few 1031s here's somethings you can do:

1. Sell outright the properties that have the greatest equity and least gain and that you've held the shortest.  These will give you the maximum cash with the minimum tax.

2. Do 1031s on the. properties you've held the longest (to avoid depreciation recapture) and have the greatest amount of profit.  You can supplement these purchases with some of the taxed cash above.  And actually buy yourself some nice cash flow with responsible lower leverage.

Thanks guys for the response.  I have considered doing a 1031 but sitting on the cash and seeing if the market pulls back doesn’t sound bad either.  Some pretty experienced investors I have talked to think there will be a lot more buying opportunity in a couple years.  Also with the 1031, I would like to move into an apartment complex around 50 units give or take if I take that route. Most likely I would have to sell as a portfolio and take a bulk discount vs selling individually to a larger pool of buyers.   I’m debating if it’s worth taking the discount or just paying the capital gain taxes and selling individually.