It's a general principle of investing in property that the longer you hold onto a piece of real estate, the more likely you are to receive a good return when you finally sell it off. For this reason, property investors tend to hold onto their properties for upwards of a decade.
But what if the market is performing particularly strongly? Your property might have experienced tremendous capital growth that you want to take advantage of right now. Is it the right time to sell?
The benefits
The chief benefit is that you will presumably be selling your property at the top of the market, achieving a tidy profit for it as well. By selling now, when you know the kind of return you're likely to achieve you don't have to worry about losing out if the value declines in the future.
Selling might also be the right option for you if you're not running a cash flow positive property, or the property is simply not worth the holding cost anymore. Carry out a portfolio review and find out whether or not you'll simply do better to sell the home on now.
The costs
While you might be selling the property for a sure return, you might also end up kicking yourself if the market continues to perform well over the next few years. That could be thousands of dollars of profit you missed out on.
Provided that prices don't experience a downturn, that also means you'll lose out on the tax benefits of years of depreciation you could've claimed. This can add up to a significant amount.
Finally, if your property is positively geared and netting you plenty in terms of rent, it might pay off better to simply hold onto it. No matter how big the sale profit is, it might pale in comparison to receiving a yearly rental income in the long run.
These aren't the only points to consider when deciding whether to hold or sell. There are a number of questions you should ask yourself, too:
How long have you owned the property? If you sell it within the first 12 months, you won't be eligible for a capital gains tax discount.
Can you access the equity? If so, this might serve your purposes better than selling the home.
Where else would you invest if you sell? Have other options lined up before you make a decision.
Give all of these points a good, hard think before you make any decisions - especially ones you can't reverse.
