What You Need to Know About Selling a Rental Property

by Nov 13, 2017

Real estate can make a great investment. The monthly rent that you receive each month on a rental property can help you bring in a regular income. With real estate typically appreciating over time, you can make money month after month and then again when you are ready to sell the property.

However, selling a rental property is not the same as selling a primary residence that you live in. Here are some things you need to know about the process.

1) Your tenant may have the first shot

In some states, a landlord has to offer the tenant the first right of refusal. That means that before you put the house on the market to receive offers from others you need to offer it to the tenant that is currently living in the house. When you notify your tenant that you will be selling the property, you will need to provide them with the sales prices and disclosure about the property.

The tenant then has a set time period to consider if they would like to make an offer on the house. If the tenant makes an offer that you are happy with, you saved yourself time and trouble in trying to sell the house. However, if the tenant declines to purchase the property, it can be listed on the open market. When you receive an offer on the house, the tenant will then have a second chance to purchase the house by matching or beating the current offer that you have.

2) Help your tenant rent to own

If you have a good tenant that is interested in purchasing the property, but does not have the means to do so through a traditional mortgage lender, you could assist them by writing up a rent to own contract with a real estate attorney. This is a way to allow your tenant to continue living in the house while they pay over the market price on rent in order to have money apply to a down payment. When the tenant is ready, you will be able to close quickly since the tenant is familiar with the house.

3) You are responsible for capital gains tax

When you sell a rental property, you will be required to pay capital gains tax on the profit that you made on the house. When you sell a house that you live in, you are able to avoid some of this tax, but you cannot do that with an investment property, unless you reinvest the funds. This is called a 1031 exchange.

In order to take advantage of a 1031 exchange, you need to follow strict rules so talk to a tax advisor before proceeding forward with this option.

If you are not able to come to an agreement with your tenant about the price of the house, you can sell to another buyer. Proceed with caution when you do this to try to reduce the tension between you and your tenant. You need your tenant to continue taking care of the house while they live in it and accommodate showings as they are scheduled.

Recent Blog Post

Certified Cash Home Buyer Program

Certified Cash Home Buyer Program

You may be asking yourself what is a Certified Cash Home Buyer? And, really it's Anchored Homes' personal guarantee and company promise that everybody here at the Anchored Homes team is going to treat your situation and your property and the overall transaction with...

Increase Your Melbourne FL Home’s Value With A Few Improvements!

Increase Your Melbourne FL Home’s Value With A Few Improvements!

Are you looking to sell your home? If you live in Melbourne, Florida keep up with the latest trends in home improvement and increase your property value before putting your house up for sale. From upgrading specific rooms to investing in energy-efficient home...

Is It Hard To Sell Your Melbourne, Florida Home? Here’s A Few Tips!

Is It Hard To Sell Your Melbourne, Florida Home? Here’s A Few Tips!

While selling your home will require some effort, it doesn’t mean it should be more difficult than it has to be. It is possible to achieve your goals and utilize the full potential of your property by being smart about how you utilize your time and energy. If you’re...

The Advantages Of Working With A Cash Home Buyer In Melbourne FL

The Advantages Of Working With A Cash Home Buyer In Melbourne FL

A home sale can be an emotional, time-consuming, and stressful experience. As soon as you put your home up for sale, you’ll need to contact a real estate office, follow the terms of the realtor’s contract, and wait for months to receive the cash. Do you have the...


Enter your information below to received your fast cash offer!