Knowing when to sell your investment property determines how much profit you make. If you sell at the right time and under the right circumstances, you will make more money.
Many property owners try to hold their investments for 8-10 years before selling. But who says you have to sell after this period? Many investors prefer to be flexible than follow strict rules.
To sell an investment property, you need expert opinion and guidance from a realtor. These experts will give you insight into when to sell an investment property and at what price.
This article will share the best tips on when to sell your investment property.
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When to sell an investment property
There are two major instances to consider when it comes to selling your property. Your current situation and the time of the year that favours real estate sales the most.
If you’re wondering, ‘when should I sell my investment property?’ the answer mostly depends on your present circumstance.
Are you working or thinking of selling investment property after retirement? Also, it could be a matter of the condition of your investment property and your evaluation of it.
Once this is determined, the question that comes up next is ‘when to sell an investment property?’
What matters in the second instance is time. Consider the period within the year that favours selling an investment property best.
You will soon know the time of the year to sell your property and why.
You should sell investment properties when;
You’re making a loss on your current investment.
Having a property that isn’t yielding might not be anyone’s fault. But you should step up and make the sale when you find a good offer.
It might have cost you lots of money to buy your property. But you need to sell if there’s an insufficient yield on the property.
Here’s how you can determine that your current investment property is raking in profits. The first is by yield.
You will need to find out how much the property is yielding. Let’s say you were letting out your property, and it is worth $20,000.
You’ll need to sum up how much you’re making in a year. Deduct the cost of maintenance and expenses on the property. And you’ll have your yearly profit on the property.
If you divide this profit by $20,000 and multiply 100, you’ll have the yield on the property.
Another way to determine profit or loss is by calculating capital gain. Evaluate the current cost of your property. Then, deduct the cost of acquisition, transfer, and improvements.
You want to invest elsewhere.
If there is a great investment opportunity in another area, you can sell your present investment property and invest elsewhere.
Let’s say your current investment property isn’t satisfying your financial needs. It should only be a matter of time before you sell it.
Ensure to find a more profitable property to invest in. Also, pay attention to mistakes you might have made in your previous investment.
You are making plans for retirement
Are you planning to retire soon? This might be a great time to sell your investment property.
Keeping up with the maintenance of the property might be a burden. This is because the flow of income after retiring might not remain the same.
And if repairs and maintenance don’t motivate you to sell, taxes will. If your property tax is high, it’s a sign that you should sell your investment property.
Keeping up with the taxes might be difficult after retirement. And property taxes keep rising with time.
However, there are disadvantages to selling your investment property while retiring. For instance, you could lose access to the age pension.
Also, you could be lonely after moving to a cheaper and quieter home.
You need to make sure it’s an informed decision and cover all bases to avoid making horrible mistakes.
You’ll receive capital gains tax exemption
Selling a property that costs $20,000 for 30,000 is a healthy profit on an investment. And when you make a profit on your investment, you must pay capital gains tax.
You may wonder, ‘How do I avoid capital gains tax when selling an investment property in Australia?’
Some circumstances exempt you from paying capital gains tax or help subsidise it.
For example, if you’re making a loss on the investment after selling, you won’t be required to pay a capital gain tax.
Wondering how long you have to keep a property to avoid capital gains tax? The answer is at least one year. You will also have a 50% discount on the CGT.
Meanwhile, if a company owns the property, there is no discount but an extra 30% on the CGT.
Best time to sell investment properties in Australia
When you’ve decided that you’re in a good position to sell an investment property, you should not sell it off to the first buyer that comes your way.
You need to list and sell at the right time. Now, there are no specific rules to this. You can combine specific times of the year with other factors before selling.
In Australia, you better not consider selling an investment property in winter. It might sound odd, but it’s true that houses look better and consequently sell better in spring.
During this time, the skies are clear, and the scenery of the environment is bright. And yes, there will be more buyers now.
But there would also be a lot of sellers in the market, so be ready for some competition.
Enthusiasts advise that it’s better to stay off selling your property during spring. But, you can still list them.
When there are many buyers and sellers, the market is busy, and you might not get a good value for your property.
There is also less competition in autumn. And there are few houses left from the initial rush that is likely to happen in spring.
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