As we move into fall, many Minneapolis and St Paul duplex owners who are considering selling may think it’s better to wait until spring. After all, that’s the conventional thinking – when it comes to single family homes anyway.
What if I told you that investment property buyers are out in droves between September and December?
Why’s that?
If someone buys an investment property by the end of a year, regardless of when the transactions closes, the depreciation off your taxes for the entire year.
In other words, if the property sells and closes on December 31, the buyer gets a full year of depreciation.
On the other hand, if you’re a seller who wants to cash out rather than conducting a 1031 exchange, you may want to close right after the first of the year. This gives you the entire year to work with your tax advisor on strategies to reduce the amount of tax you owe.
An investor who sells, say, in April may be on the market 30 days before receiving an offer, and have to wait another 30 to 45 days for the buyers financing to come through. For the seller who wants to cash out this may or may not pose a challenge for tax strategies.
As always, any investment property owner who is considering selling should consult with their tax advisor before moving forward. The financial consequences of not doing so can be substantial.