In addition to property management, Nesbitt Realty is a full-service real estate brokerage serving Shenandoah County
After a period of service as a rental unit, property owners often choose to sell their property. 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 Shenandoah County.
If you decide you would like to sell your rental unit, Call us and we'll start 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 really net at the settlement.
What is a 1031 Tax Exchange and how can it benefit me?
A 1031 Tax Exchange is usually of greatest benefit to landlords in Shenandoah County who have held rental for a longer period of time (more than ten years). Thanks to IRC Section 1031, a properly structured 1031 exchange allows an 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 shelter landlords 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 reveal opportunities that might have otherwise been overlooked.
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 unit. 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.
In contrast, if you need it, members of our staff have CPDE (certified distressed property expert) training. We can explain to you the consequences of a short-sale help you decide if that choice is best for you and your rental property.
Should you know more about the area?
Our Guide to Real Estate is a helpful resource for everyone who hopes to review important real estate information about Shenandoah County and neighboring communities. The Guide to Real Estate provides information about what has sold and what is on the market, and some shocking facts that you may not know. Also, our Guide spotlights quite a few of the aspects of residing in Shenandoah County. Definitely, most of this is useful for purchasers and sellers, but rental investors and tenants should also find these tools to be somewhat eye-opening.
a useful reference for rental investors in Shenandoah County
- Before you put a renter in your investment in Shenandoah County
- Collections and evictions
- Communications with the renter
- During tenancy
- End of tenancy and what happens when a renter 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 Realty finds tenants
- Insurance matters for property owners using our property management
- How Nesbitt Realty & Management manage keys
- Shenandoah County property owner responsibilities
- Maintenance, repairs & inspections for your property in Shenandoah County
- The move-in inspection
- Property management information form
- Selling a 1031 tax exchange & more
- Starting our management of your rental investment
- When property owners don't yet know their new address
- Vetting tenants in Shenandoah County