Should I sell my investment property?
With the surge in interest rates and property taxes in certain states, some property investors are contemplating selling their investment properties. Although it might appear to be a savvy move to sidestep the escalating expenses of property ownership, it is necessary to factor in sales costs as well.
Also, consider if you opt to sell now and re-enter the market late, you will want to purchase a property of the same caliber as your current investment. Below, we detail some of the primary costs associated with selling and how they could affect your financial outcome when selling.
Consider Profit and Changeover costs
If you've held onto your investment property for several years, chances are its value has appreciated. It's tempting to focus solely on the difference between your purchase price and the potential sale price, but it's crucial to consider other selling expenses. The changeover cost is the difference between what you sell for and what you buy for next time...If you are buying and selling in the same market or a very different market, this is a very relevant number.
Firstly, agency commissions can vary greatly but experience counts much more than commission rates. This can change the outcome dramatically and can bring a much better outcome to your end result, using experienced agents like Craig and Leanne, with a combined 38 years of experience to assist you.
Capital Gains Tax
Upon selling your investment property, you'll be liable to pay capital gains tax (CGT). If you've owned the property for over 12 months, you qualify for a 50 percent CGT discount. Keep in mind that the capital gain is calculated based on the sale contract date, not the settlement date. Therefore, if you're considering selling near the end of the financial year, take that into account when reporting the capital gain.
Evaluate Your Long-Term Objectives
Both options—retaining an investment property or selling it—entail associated costs. Deciding on the best course of action for you hinges on your long-term objectives and what you aim to accomplish through property ownership. By holding onto a valuable asset like property, you always have something to leverage for further growth or to continue generating consistent income or tax deductions.
Deciding whether to hold or sell your investment property is something to determine based on your unique situation. It’s important to remember the costs associated with selling and how that will align with your long-term goals. And, as always, it’s critical to get tailored advice from your accountant, financial advisor, and other professionals to help you make an informed decision