Selling Your Commercial Property: Taxes and Other Considerations

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.

One Response to Selling Your Commercial Property: Taxes and Other Considerations

  1. Phyllis batter says:

    I have a dally depleted condo I bought a few years back. I used it for five years and now rent it. Everything is depreciated as I bought it with depreciated money. It is rented with a high monthly service fee--it is across from new court house with top if small tenants in the building- I want t to sell it but understand ill pay 25 per cent capital gain plus state. Can ibuy a building on east coast I live and work in? Maybe 2/3 residence with front storefront? I have an inventory of dolls and collectibles I haven been able to sell in Hawaii because of shipping costs? Ideas? !

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