When is a good time to sell?

[ashman]

I have a positively geared investment property which I have held for some time. It is an apartment in a fairly large complex and I don't foresee much capital growth in it's value due to the size of the complex and the age of the complex.

Although I don't need the money, I'm considering selling it and taking the CGT hit instead of the ongoing income tax...

Just wondering what others have done in a similar situation?

 

[Paul@PFI]

Buy low sell high comes to mind. But wouldn't you sell when you want to sell....

The high entry and exit costs (taxes, duty, agent fees etc) from property may inhibit future return to property.

Most investors seek to defer the decision to quit if the property is self funding and generate positive returns I guess the issue may be one of what would you do with the equity when its sold and tax is paid.

Paying tax annually on income is a good thing....The income is paying the tax. You keep more than half. The cap gains are then a bonus and concessionally taxed. If you don't need the $$$ I would consider two options:
1. Accept it;
2. Buy another property that is neg geared using equity in the first. That neg gearing may offset the -ve gearing.

 

[Terry_w]

I think many people see a property that is being positive geared as a good investment and would just keep it based on this fact.

But even though a property is positive it may still not be a good investment. Consider:
1. its yield based on value
2. capital growth prospects
3. Costs after all expenses
4. opportunity cost of tying up your money
5. serviceability issues - is this property preventing you from borrowing for more?

If you sold, could you
1. pay out non deductible debt with the proceeds, and
2. get a better performing investment?

If so then work out the costs of selling and determine if it is worth doing.

 

[Scott No Mates]

Although I don't need the money, I'm considering selling it and taking the CGT hit instead of the ongoing income tax...

Ashman, what will you do with the funds released? Is it going to sit in the bank getting a pitiful return on which you will still be paying tax? Same problem as you currently have. Do you require the funds for other purposes eg medical expenses/kids gifting/donation to charity? Is disposal going to raise other issues?

What is the ultimate aim? is it that you wish to leave a legacy to your heirs or live off the income? If it's the former, then hold on to the property and let your heirs worry about incurring any cgt ( a penny saved) if you intend spending it on lifestyle, you've earned it.