Is it the right time to sell your property? Key factors to consider

Reasons to sell

People often ask themselves: should I keep the property, sell it now, or continue waiting and sell later? Making a decision must always depend on the individual’s personal circumstances, investment strategy and the overall state of the market. All these criteria are important in deciding what defines the right moment to sell.

Personal reasons often determine when people want to sell: they might want/need to  have liquid funds available, for example for their retirement. Another reason may be to make it easier to de-facto divide an inheritance when there are more than one heirs and thus co-owners on a property. Similarly, divorce often leads to the parties deciding to sell their property to make assets easier to divide.

Another possible reason to want to sell is that managing the property suddenly feels like an unwelcome time or administrative burden, perhaps due to disagreements with tenants or real estate management, or due to the complex implementation of new legal property regulations and the related obligations.

When to sell: choice of investment strategy is a decisive factor

Apart from personal reasons, current conditions on the real estate market can determine the right moment to sell a property. Some types of financial investments can lose appeal when interest rates are low or in an uncertain economic environment. During these times, investing in "permanent values" such as real estate or precious metals may become more appealing. In these times, it is necessary to act with deliberation, which requires very good knowledge of the market. After all, market prices and development opportunities vary widely from place to place, especially for residential and commercial properties. You can learn basic information on  past, present, and future trends and developments on the real estate market from our materials.

When deciding on the sale of real estate, strategic investment reasons are another important factor. For example, legal obligations derived from new proposals/directives on the energy performance of buildings, or an  uncertain political or legal situation, play an important role in making wise decisions.

As part of the investment strategy, it is also possible to consider the reallocation of  investments to other property or assets; it  might make sense to take advantage of the appreciation of an increase in value of one property and to reinvest in another property having a more favorable tax depreciation advantage. The so-called speculation period can also influence a decision on the right moment to sell your real estate; properties that are not occupied by the owners themselves are subject to various percentage of income tax from the sale depending on whether the owner lives in the property and on how long they’ve owned it. Rules are different for individuals or  corporations. We recommend that you always consult an experienced tax advisor for advice in individual cases.

Revenue optimization

Perhaps you are simply interested in optimizing your income, which can indeed be a very good reason to sell property. Reasonably reinvested proceeds from the sale can open up other possibilities for you. Exchanging a  poorly‑performing, low-yield property for a functional, renovated, higher-yield one is one good way to do it. In some cases, it can resolve a  complicated situation where there are several co-owners that would like to divide their asset. You can optimize the diversification of your real estate portfolio and invest in various locations and different segments, and/or focus on maximalizing the amount of tax depreciation. If you sell a property from your portfolio and invest the proceeds in a new property with a higher purchase price, the  higher purchase price will then lead to a higher depreciation margin, reducing your tax base and tax burden, and ultimately increasing your  income.