If you are planning to sell a rental that is currently occupied by tenants, your first step should be to review the specific laws that govern tenants and landlords for your state. In Seattle, you’ll want to study the Seattle Tenant-Landlord Laws. It can be very difficult to end a lease early if the tenants have not broken any rules. We recommend waiting until the lease expires in order to avoid complications, but if you cannot, here are a few important tips to keep in mind:
Know the Tax Implications
Selling a rental property can require you to pay more in taxes than you would pay if you were selling a residential property. This is due to the tax on capital gains, which is the term used to refer to the income that you earn when an asset is sold. There are certain exemptions that apply to a primary residence, but you will not be given the same leeway on an income property. Moreover, if you claimed losses on the property in previous tax years, the profits you make from the sale now could face steep taxation. It would be wise to review these details with an accredited tax professional. He or she will ensure that you walk away with as much money as possible within the confines of current tax laws.
Managing Your Relationship with Your Tenants
Having a good relationship with your tenant is key to selling your occupied rental. You can ask your tenants if they are interested in purchasing the home. If they are and they can get pre-approved for a loan, you have the opportunity to save yourself some time and money. If they are not interested in buying, it’s a good idea to begin doing what you can to get the tenants on your side.
One way to maintain a positive relationship with your renters is to offer incentives. For example, you may offer to lower their rent for the months before you put the property on the market. You might also consider alleviating some of the expense and inconvenience of moving by offering to pick up those costs, as well.
You will want to have the place in impeccable shape before each showing, but these visits can be incredibly intrusive on renters. Clear communication is vital to ensuring their comfort and your ability to sell your property. Paying for the house to be professionally cleaned will take the pressure off of your tenants. A gift card to use at a local restaurant while you have an open house will also foster good will with your renters, and it is much more courteous than simply asking them to leave.
Sell to Investors
One way to sell your property without having to get renters out early is to sell to another investor. If your home is in a hot neighborhood, an investor may be willing to buy the property and keep the tenants in place. This is an excellent alternative that makes it possible to sell your home without breaking a lease or fighting with tenants.
Selling a rental property while it is still occupied is not easy, and there are complicated laws and tenant personalities to deal with. If you are going to try to sell an occupied property in Seattle, contact us. Our experienced professionals will help you navigate the details and sell your property with minimal stress to you and your tenants.