In addition to property management, Nesbitt Realty is a full-service real estate brokerage serving Boston
After a period of owning a rental property, property owners often decide to sell their rental unit. Nesbitt Realty is a full service brokerage and we have successfully and quickly sold many rentals at best market value for our former property management clients in Boston.
If you decide you would like to sell your rental, Contact us and we'll begin by preparing a comparative market analysis to help figure out what your rental property will likely bring if sold. We'll also prepare estimated proceeds so you know how much you'll actually make after the settlement.
What is a 1031 Tax Exchange and how can it benefit me?
A 1031 Tax Exchange is usually of greatest benefit to property owners in Boston that have held rental property for a longer period of time (more than ten years). Thanks to IRC Section 1031, a properly structured 1031 exchange allows a rental 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 rental investor 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 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 important to have a good working knowledge of the exchange process and the IRC. For instance, an accurate understanding of the key term “like-kind” can uncover possibilities that could have otherwise been overlooked.
What is a short-sale?
A short-sale happens 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 real estate investor 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 a concern lately.
Still, 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 option is best for you and your rental.
Do you need understand more about this area?
Our Guide to Real Estate is a free tool for everyone who needs to investigate real estate facts about Boston and nearby areas. The Guide to Real Estate compiles facts regarding what has sold and what is for sale, as well as some compelling facts that you might not know. Also, our Guide features quite a few of the fundamentals of residing in Boston. As might be expected, most of this is helpful for purchasers and sellers, but rental investors and tenants will also find the facts to be somewhat edifying.
a free reference for property owners in Boston
- Before you put a renter in your rental in Boston
- Collections and evictions
- Communications with the renter
- During the lease term
- End of lease term and what happens when a tenant breaks the lease
- How does the landlord get paid?
- How your management company handles the association and your community
- How your property manager handles utilities
- How Nesbitt finds tenants
- Insurance matters for owners using our property management
- How Nesbitt Realty & Management manage keys
- Boston property owner responsibilities
- Maintenance, repairs & inspections for your rental property in Boston
- 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 tenants in Boston