Selling any property can be a bit of a hassle but when it’s a rental, it can feel a bit more complicated. Communication with tenants, paperwork, taxes, and more start to stack up. It can be easy to miss important detail about selling a rental property.
It’s important to come up with a strategy on how you plan to sell and what needs to be taken care of afterward. Let’s take a quick look at the different selling strategies and two things to keep in mind post-sale of your rental property.
Selling Rental Properties Near Me in the State of Utah
When you are selling a rental property, it is important to be aware of your options. Whether or not you are selling with a current tenant in residence, there are several ways to handle a sale with a rental.
Right to First Refusal:
If you have a tenant in residence, the first step is to offer to let the renter buy the property. In some states, the tenant has a right to first refusal. This means that the landlord has to offer the home to the tenant before putting it on the market. When you notify them of your plans to sell, you have to include the sales price and full disclosure about the property.
If they decline the offer, you can then put the property on the market. Once you receive an offer, the tenant will have a second chance to purchase the home. They must make an offer that is equal to or greater than the current offer on the home.
Rent to Own:
Sometimes a tenant in good standing wants the home but doesn’t have the means to go through a traditional lender. In this case, you can choose to enter a rent-to-own agreement.
The contract, set up through a real estate attorney, lets the tenant remain in the home, paying an overmarket price on rent. The extra money applies to a down payment toward purchasing the home.
If a tenant turns down these offers then you can decide to sell the home with the tenant in residence or empty. When you sell the home with the tenant still there, you have a few different options.
One of these options is to just sell the place and let the new owner decide whether or not they are keeping the tenant. There are laws regarding honoring the lease length and people buying a rental home to live in themselves.
Selling to an Investor Vs Direct Sale
If you don’t want to do that, you have two options: sell to another investor or do a direct sale. Selling to an investor means that the new owner will most likely be happy about not needing to find a new tenant. They will take over the current lease and continue to rent out the property.
A direct sale is selling to a reputable home buyer that will buy your property as is. They usually offer a fair cash price for the home and ensure the sale is quick and easy.
If you decide to sell without a tenant in residence, be sure to do careful research all tenant rights for this process. There are a couple of strategies you can take to help transition the tenant from the property.
Cash for Keys
This method is basically paying the tenant to move out. You can offer to cover moving costs or agree on a lump sum they will receive to move.
Early Termination Notice
If your lease has a clause addressing what will happen if you decide to sell the property. If the tenant signed the lease, it is legally binding and they must honor the clause.
Plan for Capital Gains Tax when Selling Rental Properties
When you sell a rental property, remember to plan for capital gains tax. The capital gains are calculated by subtracting the original price you paid from the price you are selling the property for.
Most federal capital gains taxes are 15% of the profit but can go as high as 20% depending on the circumstances. The Utah capital gains tax rate is 4.95%, the same as all other income taxes in the state.
Early Rental Property Management Agreement Termination
If you are using a rental property management agency, you will need to consider early termination terms. The terms will vary from one agency to another, but in most cases, there are a few general steps to take.
- Review the Contract’s Cancellation Policy
- Send Written Notice to the Property Management Firm
- Plan for Any Termination Fees or Applicable Costs
- Request Copies of All Records and Documents
- Verify the Property Management Firm Notifies the Tenants
Avoid the Hassles of Utah Real Estate
Instead of worrying about selling on your own or finding a decent realtor, consider selling your home directly. Fast Home Offer Utah is a company that buys houses as is. They pay cash and help you avoid the months of listing, showings, and waiting that comes with the traditional selling method.
Save time and effort by eliminating all the expenses and duties that come with selling your home. Submit a form on our website and get a fair cash offer within 24 hours. Pick your closing date and sell on your terms within seven days. No contracts, commissions, or cleaning are required, and we even cover the closing costs. Contact us today to learn more.