Sentiment says keep it; the spreadsheet sometimes disagrees. Once a year, every property we manage gets the question asked properly — against the same valuation analysis and the same signed-lease rents a buyer would see.
The cited valuation analysis, the rent the leases support, the taxes at today’s assessment — held against what the building would clear if it sold.
The annual call on every managed property: does holding still beat selling? Built from the same valuation analysis and rent engines.
A management company lives on the monthly fee, so “keep it” is always the answer that pays us. Ours will say “sell” when the evidence says sell — it costs us the fee, and it is exactly why the answer is worth having.
The part of selling that scares long-time owners most is not the market. It is the depreciation.
Every year you held it, depreciation lowered your taxes — and lowered your basis. Sell outright and much of that comes back as a bill, often taxed as ordinary income. Owners who know this sit on buildings for decades just to avoid the exit.
Sell through a 1031 exchange and nothing gets cashed out with the taxman: the gain and the depreciable base carry forward into the next building, the recapture bill is deferred instead of due, and depreciation keeps running on the new property — with a fresh schedule on whatever you stepped up into. Our job is finding that next building, which is the half an exchange company cannot do for you. The mechanics, the clock and the traps are written out on the exit page.
We are not your accountant and this is not tax advice. Everything here is arithmetic on public records and the numbers you type — run it past the person who signs your return before you act on it.
Two ways forward.