Sell...Or Hold? The Capital Gains Question...

[Jeremy Clarke]

To sell or hold, that is the question! 

I own a few properties in Northern Colorado, one of which i lived in for two FULL years before moving out. I've owned that property for 4 years now and currently rent it out to some students.

My current cap rate is right around 8%. It was much better but appreciation in the front range of Colorado has been insane. Over the 4 years I've owned this place, the value has increased by 64% (with no signs of slowing down in the next couple of years).

My goal is to continue to buy-hold, in this market as well as others, but it is getting very expensive to continue to buy new properties in my area. If i sell this property within the next year or less, i will be able to avoid capital gains tax. I net about $700 a month after my mortgage.

I don't "need" the liquidity really but you have to imagine that maybe at some point, the growth begins to flatten a bit. That said, would you take the money tax penalty-free and run (maybe reinvest it elsewhere) or would you hold on to a pretty good property that pays you cash each month?

What would you do??