Long & Foster Real Estate, Inc.
Philip Piantone, Long & Foster Real Estate, Inc.
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Selling Your Home as an Investment Property

by Philip Piantone 10/11/2020

Photo by fran hogan on Unsplash

If you’re a homeowner considering selling your home as an investment property, timing is important. From a financial perspective, just as you probably bought strategically, you want to sell strategically too. The trick is knowing when the right time arrives. Here are four common metrics people use to determine when it's time to sell their property.

Amount of Equity in the House

A primary factor to look at is how much equity is in the home. Ideally, to sell a home as an investment, the seller can make a tidy sum. If mortgage payments are still owed, this may negate any potential profit made, but not necessarily. If you're looking to broaden your investment portfolio, be certain you can sell your house for enough money to pay off your debt with a sufficient amount left over to re-invest. If you don’t have enough equity to do this, you’re better holding off.

Market Conditions Are Good

Many owners who bought low and can sell high find this to be a strong motivator to put their property on the market. Since market conditions eventually shift to a buyer’s market, it’s a smart strategy to sell when the housing market favors the seller. Owners who have held their property for a long time or purchased as the housing bubble burst between 2007-2012, are likely going to make a better profit than investors who purchased when prices were at their peak.

Tax Code Advantages

Buyers are often motivated to sell if there are tax code advantages. For instance, the IRS currently offers a tax-deferred advantage to investors looking to sell one property to buy another. Under tax IRC Section 1031, sellers are required to find another property to purchase within 45 days and then buy it within 135 (180 days total).

By selling and making a similar real estate investment, investors can defer paying their federal and state capital gain taxes. It’s a good strategy to use if you want to leverage real estate and broaden your portfolio.

Taxes Are Going Up

If local taxes are going up, often buyers find this to be an incentive to sell. For instance, if a town severely limits commercial activity, the tax burden falls to homeowners. Over time, the tax bill may become too exorbitant. If you own enough equity in your property and the housing market is in your favor, high taxes might be your tipping point.

About the Author
Author

Philip Piantone

My goal as a Real Estate agent is to provide you, as my client, with the best possible representation for all of your Real Estate needs. I will accomplish this through a very strong work ethic using limitless energy on your behalf. You will find me a responsible and friendly agent who genuinely cares about the people with whom I work. As a lifelong resident of the Washington Metropolitan area, coupled with the best continuing training in the industry, I am well prepared to provide you with the superior service that you need and deserve to get the most out of your Real Estate transaction. Whether you are buying or selling a home, I am able to provide you with the largest market exposure and to bring you the best possible price, terms, and conditions available. You can rest assured that I can help you achieve your Real Estate goals through superior service in an honest and personable manner that will make you a customer of mine for life.