Selling Rental Property Lakewood
You’ve probably seen lots of articles on selling a house that you live in; however, selling rental property in Lakewood is something totally different.
As far as taxes are concerned, a rental house is considered an investment and this makes the whole process of selling rental property Lakewood a bit more complicated. When you sell rental property, it can be subject to a myriad of taxes and rules when compared to selling a standard house. In this regard, here are some of the most important things you should know about selling rental property in Lakewood.
Talk to your tenants about selling the property
One huge mistake that many rental property sellers make is to believe that since they are the owners, they can sell the property at any time, even without giving prior notice to current tenants. The first thing that needs to be done is understand the local laws on tenants and landlord agreements and how they may affect the sale.
In Colorado, tenants have the first right of refusal, which basically means that before selling rental property Lakewood, you need to notify the tenant about it. In addition, you should also provide the tenant with full disclosure of the property’s sale price as well as any other useful information about the property.
The tenant will be granted a grace period during which they can submit their offer to purchase the property or choose not to buy it and instead move out. Note that the tenant can still stay on the property, especially if the new owner has no problem with that. For better details of how this works, be sure to have an experienced attorney to help you with understanding local legislation when selling rental property.
There’s no need to rule out a rent-to-own deal
When selling any property, pricing is a very crucial stage. This can make or break a deal and as such, you need to pay huge attention when choosing the price for your property. The potential buyer may have a few things that they need to be done before they commit to the property, if not, they may ask for financial discounts so that they take care of the issues by themselves.
If your current tenant is willing to buy the rental property but is finding it hard to get a mortgage, you can work out a rent-to-own deal where the buyer makes a sizeable down payment towards buying the property. However, make sure that this deal is put in writing and certified by an attorney to make sure that your interests are protected.
There are capital gains taxes to be paid
As pointed out earlier, selling rental property is different from selling a residential house – and the differences are more vivid when it comes to capital gains taxes. A rental property is an investment and as such, selling one means that you must pay capital gains taxes on the income received. Unlike in the case of selling a residential house, sellers will not receive any exemptions for selling an investment property.
Where the property was used strictly for rental purposes, the capital gains would be based on the selling price less the adjusted basis (original cost less the depreciation) of the rental. If you want to minimize the amount of taxes you pay after selling rental property Lakewood, a 1031 exchange is a nifty strategy to use. What this means is that you will be using the money generated from the sale of the current rental property to buy another rental property, which essentially lets you avoid paying taxes.
Even with this knowledge, getting a buyer for a rental property is not easy. In fact, you might have to cast a bigger net in order to find one, but the good side of the story is that there’s Denver Property Flip, a local real estate company that understands your needs and is ready to work with you and ensure you get the best deal.
Call us now on (720) 370-9595 and we’ll buy your rental property regardless of the condition and pay the money after just 5 days.