We’ve discussed the process of selling a house you live in, but selling a rental property is an entirely different bird. For tax purposes, a rental house or condo is considered an investment property, which makes the sale a bit more complicated. Read on for the essential facts.
- Your tenant may have first right of refusal; which means that landlords need to notify the tenant when they are putting the property on the market and provide the tenant the option to buy.
- Don’t rule out a rent-to-own arrangement. If your tenant is having trouble coming up with a sizable down payment for a mortgage, you can arrange a rent-to-own arrangement.
- You have to pay capital gains taxes on a rental property. A taxpayer does not receive an exemption for the sale of an investment property.
- You might need to cast a broader net to find a buyer. There is no rule that you must sell your home to your tenant. In fact, you might want to market your home to the broadest possible pool of potential buyers, if money is your motivation.
Consult a real estate agent to get a good estimate of your home’s value, so that you can make a thoroughly researched decision on the sale.