Why It May Not Be a Good Idea to Sell Investment Property that’s Increased in Value

Investment Property

When you’re sitting on an investment property that has skyrocketed in value, selling may be at the top of your mind. But this might not be your best course of action. In this article, we are going to explain why it’s not always a prudent idea to sell an investment property – even when it’s increased in value.

Consider Your Capital Gains Tax Burden

If you’ve owned an investment property for a number of years and it has significantly increased in value it can be quite tempting to sell the property and pocket the net proceeds. This is especially true to seniors who are entering retirement and want to have some additional liquidity. However, what many don’t think about until it’s too late is the tax burden inherent in selling an investment property. The more your property has increased in value, the more capital gains taxes you’re going to have to pay when you sell it.

Consider a 1031 Exchange

A tax-advantageous alternative to selling your property is to exchange it using section 1031 of the Internal Revenue Code. Such an exchange allows you to defer your capital gains tax burden when selling investment property, so long as you reinvest your sales proceeds into a replacement property. This keeps your money working for you in an investment and allows you to avoid a hefty tax burden.

1031 Exchange Intermediaries

If you are struggling with your 1031 exchange, you’ve come to the right place. With two decades of experience in the 1031 exchange industry, Commercial Partners Exchange Company has the skills and expertise needed to ensure your exchange is a success. Whether you’re looking at a forward exchange, a reverse exchange, or a build-to-suit construction exchange, we are here to help. Contact us today at our office in downtown Minneapolis to learn more about our capabilities and to set up a time to chat with one of our skilled 1031 intermediaries.

  • Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.


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