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Selling property from your investment portfolio

Selling property used for investment purposes follows a similar process as selling property you’ve resided in. However, before your investment sale is done and dusted, there are a few things to keep top of mind. These will help yield a higher market value for the property, get the most out of your investment’s entitlements and translate to more green in your pocket.

Presentation

Like any apartment or home on the market, you should prepare it so that is appealingly presented to potential buyers. The difference here is that when preparing the home, you are presenting it as an investment, rather than a place to live. The property should scream high demand, rather than comfortable living space – it’s best to think of whom you are selling to when it comes to your product.

John McGrath of McGrath Real Estate Agents says “presentation counts at two crucial stages of the marketing process”.

  1. “If your property looks fantastic in the photographs used for the advertising, more buyers will be enticed to inspect your home.”
  2. “Once they are there, great presentation will help them feel good about your property … hence increasing their interest in buying it.” 

Tricky tenants

If the investment property you intend to sell still has tenants residing in it, the process of selling is slightly trickier. It is important good relationships are fostered with the mediating real estate agent so that goodwill is preserved with all parties involved.

Often, inspections can make tenants feel as if their privacy has been breached and so the real estate agent will have to notify them and ensure they are comfortable with the process. Once you plan to sell the property, inform the managing agent, who will then liaise with the tenants to negotiate inspection and open house times on your behalf.

In this respect, it is of utmost importance to respect the privacy and rights of the tenants currently residing in your investment property – the process can be quite unsettling and a burden to them.

Speak with your real estate agent about potential incentives that could be offered to the tenant – this way they will be motivated to put more effort into presentation and be more flexible with inspection times. However, ensure the mediating real estate agent is notified of such a deal and that all parties are clear on what their responsibilities entail.

Financial implications

Matters of finance complicate matters when selling your investment property. There are three main things you need to be aware of:

  1. Negative gearing
  2. Tax deductions
  3. Capital gains tax

There are many mitigating factors, which will affect how much profit you make from selling your property. For example, if you resided in your rental property at any time, capital gains tax will be adjusted for that period.

To ensure you get the most out of your entitlements and deductions, speak with an accountant who knows the ins and outs of property investing.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

For advice you can trust book a complimentary first appointment with Switzer Financial Services today.

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Published on: Tuesday, January 18, 2011

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