In addition to property management, Nesbitt Realty is a full-service real estate brokerage serving Harrisonburg
After a period of owning a rental unit, real estate investors often choose to sell their rental. Nesbitt Realty is a full service brokerage and we have successfully and quickly sold many rental properties at best market value for our former landlord clients in Harrisonburg.
If you decide you would like to sell your rental, Call us and we'll begin by preparing a comparative market analysis to help figure out what your rental property can probably bring if sold. We'll also prepare estimated proceeds so you understand how much you'll actually take away from the settlement.
What is a 1031 Tax Exchange and how can it benefit me?
A 1031 Tax Exchange is usually of greatest benefit to rental investors in Harrisonburg who have owned property for a longer period of time (more than ten years). Thanks to IRC Section 1031, a properly structured 1031 exchange allows a real estate investor to sell a property, to reinvest the proceeds in a new rental and to defer all capital gain taxes. IRC Section 1031 (a)(1) states:
“No gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment, if such property is exchanged solely for property of like-kind which is to be held either for productive use in a trade or business or for investment.”
To understand the powerful protection a 1031 exchange offers, consider the following examples:
- A property owner has a $100,000 capital gain and incurs a tax liability of approximately $35,000 in combined taxes (depreciation recapture, federal and state capital gain taxes) when the property is sold. Only $65,000 remains to reinvest in another property.
Assuming a 25% down payment and a 75% loan-to-value ratio, the seller would only be able to purchase a $260,000 new property.
- If the same landlord chose to exchange, however, he or she would be able to reinvest the entire $100,000 of equity in the purchase of $400,000 in real estate, assuming the same down payment and loan-to-value ratios.
As the above example shows, exchanges protect rental investors from capital gain taxes as well as facilitating significant portfolio growth and increased return on investment. In order to access the full potential of these benefits, it is crucial to have a comprehensive knowledge of the exchange process and the IRC. For instance, an accurate understanding of the key term “like-kind” can reveal opportunities that could have otherwise been dismissed.
What is a short-sale?
A short-sale occurs when the seller sells a property for less than what is owed on the property. In the past, because of market contractions, some of our landlord clients have found themselves in an untenable situation with regards to their rental property. In those cases the best way out was often a short sale. Quite frankly, due to market expansion and inflation, this has not been much of an issue lately.
Above all, if you need it, members of our staff have CPDE (certified distressed property expert) training. We can explain to you the ramifications of a short-sale help you decide if that choice is best for you and your rental.
Should you understand more about our community?
Our Guide to Real Estate is a handy tool for anyone who wants to find out more about Harrisonburg and surrounding communities. The Guide to Real Estate has data about what has sold and what is on the market, and a few compelling facts that you may not know. Also, our Guide spotlights some fundamentals of residing in Harrisonburg. As a matter of course, all of this is interesting for buyers and sellers, but rental investors and tenants will also find the facts to be somewhat enlightening.
a free reference for rental investors in Harrisonburg
- Before you rent out your rental in Harrisonburg
- Collections and evictions
- Communications with the tenant
- During tenancy
- End of lease term and what happens when a renter breaks the lease
- How does the owner get paid?
- How your rental manager handles the association and your community
- How your property management company handles utilities
- How Nesbitt Realty & Management finds tenants
- Insurance matters for landlords using our property management
- How Nesbitt Realty & Management manage keys
- Harrisonburg property owner responsibilities
- Maintenance, repairs & inspections for your property in Harrisonburg
- The move-in inspection
- Property management information form
- Selling a 1031 tax exchange & more
- Starting our management of your property
- When property owners don't yet know their new address
- Vetting renters in Harrisonburg