First and foremost, always seek competent tax counsel when deciding to sell your commercial real estate. In addition to capital gains taxes, commercial real estate sales also involve taxes on income, the property itself, and non-cash expenses. These need to be carefully analyzed in order to determine your tax liability upon sale. Having an appraisal done on the commercial property can help in evaluating your potential taxes.
A 1031 exchange can help you defer many tax liabilities. It’s wise to determine what you want in a replacement property before you list your property for sale. There is a specific timeframe for 1031 exchanges-you don’t want to lose the opportunity to do a 1031 exchange due to lack of planning.
You should also know your motivation for selling. Is it to gain liquidity? To free up funds for another commercial investment? And how quickly do you want to sell? In other words, is your need to sell immediate, or are you more motivated by price than by time?
Finally, you should seek the advice of a competent commercial real estate broker who knows the market and can price your property accordingly. The broker should have experience with the type of commercial property you wish to sell and should be able to provide you with details about comparable properties that are currently on the market and that have sold recently.