What should I do with properties with significant gain (Seattle)

[Jason Woods]

I live in the Seattle area, where I have a couple of SFH rental properties which I bought a few years back, now they all have significant appreciation due to the red hot Seattle market, now I'm trying to figure out the best strategy forward.

I don't want to sell because of the significant tax hit; doing 1031 exchange is also problematic since I don't find anything attractive in the Seattle market today; the cap rate on the rental is about 3%, pretty miserable. After years of rapid growth, the Seattle market is also clearly slowing down (although I don't think we will have a crash, probably flat or slow growth for the next few years). 

Any ideas and suggestions? Thanks in advance!

Buddy

[Mike B.]

@Jason Woods - I would consider the following: 1031 exchange to a vacation home or possible home you may want to retire in the future (eg Lake Tahoe, AsPen, montana, FloridA etc) Have it rented out and managed by property manager for now. OR do the 1031 but buy rentals in other states This year (2018) is almost over but if in 2019 you could make less money (think sabbatical or quitting your job) you could sell one property and your tax basis would be less since you have less W2 income Consult a CPA for the following possIble tax deductIons/advantages: Selling property And... donating money to charity, gifting money to family members, making improvements on your own home, setting up self directed IRA or a Roth IRA