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FAQs of Selling your Rental Property in Maricopa County, AZ

by | Dec 6, 2021 | Blog | 0 comments

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Is this your first time selling a property in Maricopa County, AZ? No.

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Is this your first time selling a rental property? Yes.

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Have you thought about your tax liabilities? No… ok, this is the blog for you!

There are many rental properties in Maricopa County, AZ – over 350,000 absentee owners.  The rental market has been booming recently across the valley as property prices have continued to rise and inventory is very low forcing families to rent while they wait to find the right home to buy.  You would think that means everyone should go out and buy a rental property however the rise in prices has also made it more difficult to earn good cash flow on a rental property. 

However, not all real estate investors buy for cash flow, some buy for future gains. Some buy for cash flow but are quickly disappointed with how difficult it is to be a landlord and with the low cash flow decided it is not worth the effort. There are even high-income individuals that purchase rental properties for the deductions and losses to offset their higher earnings and put themselves in a lower tax bracket. Some people inherit properties and turn them into rentals or inherit a property that is already a rental. 

No matter how you obtained your rental property or for what purpose you purchased it, if you are looking to sell your rental property in Maricopa County, you will want to take a few moments to consider the tax implications of the sale. Taxes are not something that everyone thinks about all the time, but real estate is a high priced item that comes with many tax burdens when sold!

Here are some Frequently Asked Questions when selling your Maricopa County rental property:

I just inherited a property. Will I have to pay capital gains tax when selling?

To determine if the sale of inherited property is taxable, you must first determine your basis in the property. If you recently inherited the property, the basis is stepped up at the time of death based on an appraisal and if you sell at or below that appraised value you will not owe capital gains tax.

Is it possible to sell my rental property without paying capital gains?

An Installment Sale or Seller Financing is a great way to reduce or eliminate capital gains on the sale of a rental property.

What if I lived in my rental property prior to selling it?

If you have lived in the property at all during 2 of the past 5 years (this does not have to be consecutive months) you can sell the property as a primary residence instead of a rental property. For a primary residence there is a tax credit on capital gains tax of $250,000 if you are single and up to $500,000 for a married couple.

I depreciated my property. Do I have to pay gains on that depreciation when I sell?

Yes, up to 25% depending on your unique situation. Reach out to one of our preferred partners or to your tax professional to figure out the implication of depreciation recapture.

These FAQs are just a snippet of our book “How to Save $10,000 or more when Selling your Rental Property” to download the entire book or to watch our video series explaining more tax savings strategies click 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!

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