Depreciation why sell

[Debra Muth]

I know several people who have bought properties and kept them until they were paid off and sold them. Their plan is that they no longer get depreciation on this so it made sense to sell. One bought a new property and did that all over again.

I can see the tax benefit to this but what about the revenue you would get once it was paid off.

What do others think about this?

[Steve Vaughan]

To maximize your tax benefits and conceivably your ROI, there is a point where it makes economic sense to sell and exchange into a new property to start the depreciation over again. If you exchange to the grave, your heirs would have no tax burden if they sell at that current FMV. The 'stepped-up' basis.

In the BP sea of debt to your eyeballs and 'equity stripping' through cash-out refi's (and the thousands in fees and myriad of headaches), I am one of the few ok with paying the property off and living in peace and cashflow with keeping the property and tenants I know.  Some think the work of selling one property and finding a new property is worth it.  In the multi family space it's all the harder to do.  One house to another would be a lot less hassle.  Good question @Debra Muth!