When is the right time to sell a property?

We answer these and many other questions in our video blog editions.

Here is the transcript of episode 13 to read:

When is the right time to sell a property? The beauty of an investment property is that you can sell it when you want to, e.g. when you need money. Imagine you have three rented condominiums and each apartment brings 750 € cold rent. You realize in your mid-50s that you have €2,250 in rental income and that €1,500 is actually enough for you to retire early. That is, two of the three apartments are enough and you decide to stop working a little earlier and sell one of the apartments. Then you address the team of Immobilien-Einkommen.de and the real estate, which you bought a few years before from us, we will sell again for you. The nice thing is that after at least ten years real estate in Germany can be sold tax-free.

This means that if you are not a commercial real estate dealer, but have acquired the properties privately and are not trading commercially, then you can sell them tax-free at any time after the tenth year. And of course, in a country where the tax burden is as high as in Germany, this is crucial and important for success.

Let's stay with the example of the three apartments, which each bring 750 € rent. You decide at the age of 50, you would rather stop working, 1,500 € rental income is also enough for retirement and one of the apartments is sold. Then you take maybe 500,000 € tax-free for this property and buy a vacation home in Spain from it. Then you can always, when it gets wet, cold and unpleasant in Germany, enjoy the winter in Spain in your new property. You enjoy life there because you were able to sell one of your properties tax free.

Practice shows: If you buy an investment property now for the next few years and perhaps find your dream property, your dream house, in ten years, then you buy the property. You finance it and after ten years you could make a special repayment. Then the professionals from Immobilien-Einkommen.de sell your rented property, you take the tax-free sales proceeds and ultimately repay your owner-occupied property.

This is a very sensible process, because in the next few years the tenant and the tax office pay off this investment property for you. So you build a sensible asset, use the leverage that you yourself pay only the least and most of the tenant and the tax office. You let the time work for you to build up an asset and to grow. And then, when you buy the owner-occupied property or want to make a special repayment, you take the proceeds tax-free when you sell your rented property and use them to repay the loan for your own property. This makes sense, because with a rented property you have deducted the interest on the loan from your taxes for years and the tenant has paid most of the interest for you.

So if you're asking when is the right time to sell an investment property, there are two options: A) You are retiring or want to stop working earlier, you have too many rented properties and say: I don't need regular income but want a one-time sum. You have some special goal and need for it the 400.000 € or 500.000 € which come out with the sale. Then this is the right moment OR B) You want to make a special repayment on your own property. The investment property pays off if you give it time: Time to grow in value, time to profit from inflation and time for the tenant to work off as much of the property as possible for you over the years.

The capital investment is certainly not real estate, not an investment where you make a large fortune in a very short time. If you want to do that, you can't do it with conservative investments. The capital investment real estate is a safe and conservative investment and has so much success because you take your time and let time work for you. With investment real estate you need time. 

So, when is the right time to sell? The right time to sell is when you want to take out the money, the income tax-free and enjoy your life, buy something special or make a special repayment on your property.

Keywords:
Investment property, sale, tax free, rental, amortization, return, time, inflation.