Selling rental properties doesn’t mean you’re always walking around the park. From details of property preparation and closure to additional taxes and tenant issues associated with investment properties, stress can increase rapidly. So whether you’re selling Atlanta home rentals or Denver property, check out this Redfin guide to learn the basics of how to sell your rental property with confidence in 2025.
In this article, we assume you own a property for rent in the United States.
3 important questions to ask before selling a property for rent
Are you thinking about selling your rental property? Think back to these three simple questions and make sure they are set for success.
What are your financial goals?
Think about what you want to achieve with your money. Are you looking for a quick profit, aiming to diversify your investments or address your financial needs? Clearly identifying your motivation will guide your decisions.
Is the market beneficial to you?
Check out the local real estate market. Are real estate prices rising, steady or falling? Timing sales based on market trends can increase returns. Also, check if there is strong rental demand in your area.
How does sales affect your tenants and your income?
If you have tenants, consider the impact on them. Please check the terms of the lease, tenant rights, and local laws to ensure you are compliant. You also need to consider the economic impact of losing rental income.
Sales with tenants and sales of vacant seats
Sell rentals with tenants or after they move in, each comes with a trade-off.
Tenant Occupation: Stores appeals to investors, rental income, but may limit shows and selling prices. Vacant: It attracts more traditional buyers, makes it easier to staging and gain markets, but you lose revenue while on the market.
Strategies depend on buyer audiences and local regulations.
How to sell rental properties
Step 1: Assess your goals for current market conditions
Evaluate your goals: Decide why you want to sell and decide whether to maximize profits through exchanges of 1031, sell quickly, or postpone taxes. Market research: Analyse trends in your local property to determine the best time to sell. For price guidance, please check the equivalent rental real estate sales (COMP) in your area. Consider the status of your tenant: Check your lease agreement. Do you have monthly or regular lease tenants? This affects your ability to show and open properties. Action: Contact your local Redfin agent to get a comparative market analysis (CMA). Tip: While real estate occupied by tenants may appeal to investors, it may block buyers looking for a major residence.
Step 2: Be familiar with tax and financial impacts
Capital Gain Calculation: Long-term capital gains (0%, 15%, or 20%) may apply if you have held the property for more than a year. High-income sellers may also ow 3.8% net investment income tax. Repeated Depreciation Explanation: If you request depreciation, the IRS tax depreciation expense is 25% (up to depreciation). 1031 Exchange: If you want to postpone your taxes, consider replacing your 1031 and reinvest your revenues in another investment property. Strict rules apply. Be sure to consult with a professional before taking this route. Action: Consult your CPA or tax advisor to estimate your taxes and investigate strategies such as 1031 exchanges. Collects records such as purchase documents, improvement receipts, and depreciation schedules. Tip: Keep all records for at least 6 years or indefinitely on 1031 exchanges.
Step 3: Communicate with your tenant and follow local laws
Check lease terms: Check whether the lease allows the sale to end or whether the tenant requires that the tenant allow it to stay until the lease ends. Please note that state laws in these circumstances differ. Notify your tenants: If you are selling your home with your tenants, let us know about future shows and inform them of their rights. Provide incentives (optional): To encourage cooperation or early exits, consider reducing key cash transactions or rent. Action: Talk to your landlord and tenant’s attorney or property manager to ensure compliance with local laws. Keep a record of all communications. Tip: Selling tenants to investors who want to set up tenants can help simplify the process.
Step 4: Prepare the property for sale
Evaluate the condition of your property: Evaluate repairs or upgrades required to maximize value. Focus on high roy fixes. Property Stage: If your home is vacant, raise the stage to appeal to the buyer. If it is occupied, work with your tenant and do your best to make it clean and accessible. Collect Documents: Collect property records. This means leases, maintenance history, utility invoices, and more. Potential buyers may be interested in this. Action: Hire a contractor for repairs or a Stager for presentations. Schedule listing inspections in advance to identify issues in advance so that you don’t encounter unexpected holdups. Tip: highlight the potential for income through current rent and vacancy rates in marketing materials for investor buyers.
Step 5: Hire an agent and set a list price
Work with Real Estate Agents: Find Redfin Agents and come up with competitive prices based on market trends. Find a tax advisor: Ensure tax compliance and explore your tax strategy. Vacancy Factor: If you are selling vacant property, price it like a major residence based on the comp. Action: Talk to the agent and agree to the list price. Tip: In a hot market, you can cause a bid war at a slightly lower price. That said, this strategy doesn’t come without risk.
Step 6: View Markets and Properties
List of properties: The agent lists MLS properties and sells them locally. Emphasise the potential rental income for your listing. Beyond that, your agent will help you connect with local insights and put your wealth into the right people. Display of coordinates: If the property is actively occupied by the tenant, schedule the show in accordance with state law with the consent of the tenant. If the property is free, use the Lockbox for easy access. It’s helpful to adjust your work schedule and other set times. Action: Make sure your tenants are cooperative or make sure your property is vacant on the display. Tip: Professional photos and virtual tours will attract more buyers.
Step 7: Confirm the offer and negotiate
Offer Rating: Compare offers based on price, contingency, and closing timelines. Investor buyers may offer cash for faster closures. Negotiation of terms: You can counter offers to improve prices or terms. If the property is on lease, iron all the details of the lease transfer. Action: Work with your agent to evaluate the offer. If the conditions are complex or you are looking for clarification, consult a lawyer. Tip: Cash offers from investors are often closer to faster, but they can be lower than funded offers.
Step 8: Navigate the inspection and evaluation
Buyer Inspection: Buyer will likely perform an inspection. It’s not ideal, but if you experience any issues you may need to negotiate repairs or adjust the price. Rating: If the buyer is using funding, the lender will need an evaluation to confirm the value of the property. Title Search: Title Company checks for liens or title issues. These issues need to be resolved before the sale is finalized. Tenant cooperation: Make sure your current tenant allows access to inspections by lease and state law. These laws vary from state to state, so be sure to do your research. Action: Coordinate with agents, tenants, and service providers to ensure inspections, ratings, and title reviews are carried out on schedule. Quickly provide all the documents requested to keep your transactions moving. Tip: Buyers will return frequently during the inspection period. Maintaining responsiveness and flexibility at this stage will help you keep your sales on track.
Step 9: Close the sale
Signing deadline document: After a hardworking review, dot T over I’s to the final statement, acts, and other paperwork. If the property is actively leased, the lease agreement will be transferred to the buyer. Mortgage Repayment: If applicable, mortgage lenders will provide a statement of return. The title company pays the funds to pay off the loan. Fund distribution: receive net income after deductions such as agent commissions, closure fees, taxes and more. Utility and Key Transfer: Coordinate with buyers to transfer utility and hand over keys. Action: Join the closure (either directly or remotely) or sign the document in advance. Check the new owner’s tenant notification if applicable. Tip: Check closure disclosures three days before closing. This is necessary for funded buyers to ensure accuracy.
Step 10: Handle your post-sales liability
Report a sale to the IRS: Report capital gains on your tax return on File Form 1099-S. Keep records: Keep closed documents, improvement receipts and depreciation records for at least six years. Action: File your taxes with the help of a CPA. Keep your documents securely. We recommend that you also keep digital copies. Tip: Are you planning a 1031 replacement? You must work with qualified intermediaries and follow strict IRS rules.
Sample 12-week timeline for selling rental properties
Week 1-2: Research the market, consult with experts and address tenant issues. Weeks 3-4: Prepare the property, set a price, and list the property with the Redfin agent. Weeks 5-6: Sell properties, view properties, and confirm offers. Weeks 7-10: Due diligence and negotiate repairs. Weeks 11-12: Close sales, transfer ownership, and submit taxes with support from the CPA.
Remember that this timeline doesn’t work for everyone. You can speed up or slow things down, whether it’s tenant lease conditions, repairs required, or market conditions. Use this as a general guide and adjust it based on your specific situation.
Final Thoughts on Rental Property Sale
In summary, selling rental property is about navigating tenant rights, targeting buyer audiences, and focusing on finances. If you need practical guidance specific to your situation, reach out to the Redfin agent today. They will get you on the right track to make your home rental sale successful.
