SELLING KILLEEN RENT PROPERTY
It's been a busy start to the year already! Several owners of rent properties in the Killeen Fort Hood area have called. They are thinking about selling their prooperties and want to find out the best way to get them on the market and get them sold. They have come to the point where they are tired of being landlords and just want to sell and be done with it! Put it on the market and get it sold! But are they really ready to sell? There are important steps to take to prepare to sell any rental property!
The number one thing to consider before putting your rent property on the market is to consult with a very well qualified tax strategy person.
Why? Because not only is your net from the sale of the investment important, the possible TAX EFFECT of the sale is even more important!
TAX EFFECTS OF SALE OF RENT PROPERTY
There may be capital gains. There will be recapture of depreciation (whether you took depreciation over the years or not!). You may be able to deduct costs of fixing up the property to sell.. but your tax person can advise you on how much you can deduct. Know your numbers before selling!
Capital gains are figured on the profit from a sale. Profit is sales price less basis in the property (what you paid for it plus any improvements made). The tax code says you must have lived in the home for 2 out of the past 5 years to be exempt from the capital gains tax. Can you pass that test?
Members of the military do have special consideration for capital gains. It’s called the “military suspension” and takes into consideration that members of the military cannot control when or where they move when it’s time to PCS. This is good news for our huge pool of military rent property owners but it's a little complicated and needs an experienced tax advisor to interpret and apply the tax code in regard to the suspension.
Knowing how possible tax issues will affect your bottom line (net profit) from that rent property in Killeen might change your plan to sell right now, or at least give you time to develop some offsetting losses for your tax year.
STILL WANT TO SELL?
IF you decide to go ahead and sell, spend time with your realtor and get a good understanding of what is selling and who will be your target buyer.
The condition of a home affects the price. The same size house may sell for a range of $112,000 to $132,000. The difference is all in the condition of the home. If your rental property is looking a bit sad and run down, it might be worth it to spruce it up a bit with some paint and new flooring. Take care of any deferred maintenance like rotted wood on the exterior, or droopy privacy fencing. Make sure your heating and air conditioning is in good working order. CLEAN the property as if you were going to live in it! You will more than recoup the cost (usually) of these changes, and will sell that house at a higher price and in less time on the market.
The Killeen Fort Hood area is full of rental homes. When you feel it is time to sell, consult your tax advisor first. Then, spend time with your Killeen realtor to get a firm understanding of the local real estate market and how you should prepare your property to sell!
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