Making the decision to sell your investment property is exciting and empowering — especially considering the performance of the current market. You’re sitting on a high-value property and all the years of effort to build your wealth is about to pay off.
Whether you want to reinvest that money elsewhere, use it to fund travel around Australia or help your kids enter the real estate market, the goal is to secure the highest sale price. To do this, it’s essential you have all the necessary information to move through this confidently.
While properties are sold year-round, some seasons are more lucrative for selling. The thing is, the pandemic changed this and the real estate market has been hot ever since. So, you don’t need to worry about timing, as we’re in a seller’s market. There are plenty of reasons for selling investment property — for retirement, if it’s not performing well, to re-invest, to access Capital Gains Tax exemption, or simply because it’s time. Take the time to reflect on these points, addressing both the logical and emotional reasons. You’ll know when it feels right.
To simplify the process, there’s five steps to take to sell your investment property.
Because you’re selling a property that’s also someone’s home, take the time to brush up on the tenancy agreement and the laws in your state. Be flexible with the needs of your tenants, as they might want to leave sooner if they find a new place to live.
It’s also worthwhile to start putting together a list of things you need to do before you put the property on the market. Once you’ve informed the tenants, work your way through any structural repairs and tidy the house for sale. Look for opportunities to increase the asking price.
While every house is different, keep in mind these common costs associated with selling an investment property:
Selling your investment property is a major financial and lifestyle decision. You probably have many questions, such as: what tax do I pay? What expenses can I claim? What about Capital Gains Tax (CGT)? How can I calculate tax gain or loss on a sale of a rental property?
Well, since your property isn’t your main residence, there’s a tax on selling a house — Capital Gains Tax (CGT). Investment properties and holiday homeowners are required to pay this tax upon selling. The tax rate depends on your taxable income in the year of the sale. You’re entitled to a 50% discount (if you’ve owned the property for more than 12 months).
There are three ways for working out your Capital Gains Tax on a real estate property: the discount method, the indexation method, 12-month ownership period method. By doing your due diligence with research tax on real estate gains, you’ll be able to reduce how much you pay (or even avoid it altogether).
Some of the options are to use the temporary absence rule, invest in superannuation, and getting the timing of your capital gain or loss right. For example, if you foresee your income in the next financial year, you can delay selling, so your lower marginal tax rate means you’ll pay less CGT.
For more information, visit the ATO to calculate CGT on your property. Do this along with the guidance of your accountant.
Choosing the right real estate agent to sell your investment property is a multi-faceted decision. It’s not just finding someone who can get you the best price, in the fastest time. It’s that agent’s personality, punctuality, and experience that’s important.
When you engage with Agent Select, we’ll find you up to three of the top agents using our sophisticated algorithm, then coordinate appraisals from two or three… rather than inundating you with hundreds of calls from agents, like other comparison websites do.
Our mission is to empower you and other homeowners through the entire sale journey. We exist to help fix the power disparity and give you all the information you need to make a more informed decision. Because this is, most likely, the biggest transaction you’ll make.
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