Many people purchase a rental property with the high hopes of seeing rental checks each month without doing any work and dreaming about retiring from their 9-5.
Rental Properties in College Towns
Some even think to purchase rental properties in college towns to rent out for big $$$. Most people don’t ever think about the challenges they will face when they acquire these rental properties in Tempe. The headaches of the college students not being responsible to take care of the property. The constant turnover in student housing. The holes in the walls that will have to be patched after a college party has renters playing beer pong which inevitably leads to someone accidently punching a hole in the wall. In all seriousness there are lots of reasons why being a landlord in Tempe AZ for Arizona State University students can seem like a spectacular idea but after a few years you may find the juice is not worth the squeeze.
In Tempe Arizona we are lucky enough to have a very strong rental market due to student housing and Spring Training games, but there are also issues like sewer roaches (ask me how I know!). When the city of Tempe sprays for roaches every few months there is nothing you can do but try and close all your drains and hope your tenants aren’t freaking out!
Liz & Marie specialize in taking over these headache properties in Tempe, we offer you several options to help relieve you from the stress of owning these problem properties and we offer you ways to save on taxes when selling these rental properties. We have an entire book dedicated to this topic and you can learn more here.
What are Capital Gains?
Many people don’t think about the capital gains they will have to pay when selling a rental property until it is too late, however we can help you plan and lower or eliminate those capital gains. First, what are Capital Gains? Capital gains are the gains or profit you make on an asset such as stocks/bonds, real estate, cars, boats, RVs and other tangible items, when you sell the asset. Here we will focus on capital gains on the sale of real estate. The capital gains are determined by calculating the cost basis and realized gains. IRS Schedule D is where Capital Gains are reported. Capital gains also affect your overall Adjusted Gross Income (AGI).
Seller financing or an Investment Sale is a great strategy to sell your Tempe rental property and pay less in taxes by taking payments over several years rather than getting paid everything at the time of the sale. An installment sale also known as seller financing is the sale of property where you receive at least one payment after the tax year of the sale. If you realize a gain on an installment sale, you may be able to report part of your gain when you receive each payment. This method of reporting gain is called the installment method. You can’t use the installment method to report a loss (see IRS Publication 537).
A lease option is a great way to hand over the responsibility of your Tempe rental property to Liz & Marie and sell at a later date and can better plan for the capital gains tax or defer using a 1031 tax exchange.
If you have recently inherited a rental property in Tempe there is something called stepped up basis where the property is appraised as part of the probate process and if you sell the property at the newly appraised value or less you will not have to pay capital gains on the sale of the property.
No matter why you are selling your Tempe rental property we can help. We can even purchase properties with tenants in place! If you are interested in learning more check out our book “How to Save $10,000 or more on Taxes when Selling your Rental Property” and video series here.
About Liz & Marie
Liz & Marie are the area’s leading real estate solutions company. We successfully work with homeowners, buyers, sellers, real estate agents, and real estate investors, buying and selling all types of residential real estate. We are confident that we can find the right property or solution for you, whether you have a house to sell, are looking to buy your next investment property, or are looking for your family’s “forever home.” We can share our knowledge so that you can make the best decisions for your situation and we are dedicated to making everyone’s experience a smooth and successful process.
Liz & Marie specialize in buying and selling your home at the price, and on the timeline, that works for all of us. Our extensive knowledge of real estate investing and a large network of real estate investors nationwide allows us to offer more buying choices and a wide variety of selling options for all types of home buyers and sellers, including financially distressed homeowners. Our mission is to work hand in hand with all parties and to handle every situation with the utmost professionalism and care.
We are thrilled to be a part of this next chapter in your life. Our commitment to excellence starts with treating you and your transaction with the utmost care and professionalism. We know that buying and selling a home is one of the biggest decisions you’ll ever make and we are humbled that so many homeowners choose us to join them on their journey. Let us lead the way and earn your business today.
We may be Crazy Liz and Wacky Marie but together we can do anything. Our combined experience in real estate has given us tons of lessons and has provided us the opportunity to help many homeowners! We are always striving to learn more and help others!
Let us know how we can help you today!