Are there others in this group that want to cash out of the rental/investment properties? How did you deal with the huge capital gains?

I am aware of 1031 exchanges etc. but they just defer the liability and don't fully eliminate or reduce the burden.

Some of the properties have an appreciation of over $1M especially when you consider the depreciated cost basis.

Did anyone go through the route of converting them to primary residences and taking $500K exemption to reduce the burden?

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1031 or cost segregation on the next property. You’re right that it only defers it, but if you kick the can down the road long enough, you never have to pay.

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Yes the idea is to die and let kids get stepped up base.

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Keep kicking the can and ultimately when you die your kids will get stepped up basis and no one ever pays tax

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Additional background: We have no kids or any heirs to leave it to. I also don't want to continue to have the burden of managing these properties.

Hire property management firm?

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Why would you ever sell a rental property

You’re overthinking it. Just raise the rent to whatever would make you want to keep it, lol

Bad take is bad

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We sold a rental at the height of the market with over $1M capital gains. It was a pain to maintain, older property, very high and increasing HOA, rent was slow to rise, had a long term tenant about to move out and were looking at some very expensive repairs, we moved out of the area already so it was harder to manage, and we wanted some cash to buy a bigger primary residence. At the time we explored 1031 (near impossible to find anything reasonable to buy at the time) and qualified opportunity funds to defer liability, but ultimately just paid the tax. We were not going to move the family back to make it a primary.

Keep upgrading to larger properties. Defer till you die.

I know a few people now that are taking the appreciation by selling and just paying the tax. Many small mom and pop landlords with a few units don’t want to deal with property management anymore and it’s too difficult to 1031 since everything is overpriced. Plus macroeconomic national trends are skewing towards less landlord friendly environment. Just my take on it.

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