Selling investment property - is it time? What am I missing...

[Scott Donnelly]

Hi all, would love to crowdsource some opinions on making a decision here. 

Our situation: Purchased a rental property (condo) ~2.5 years ago. Lived there briefly, but not long enough to use home/primary exemption for sale. Invested ~41k for purchase, and very little otherwise. Now have the chance to sell for probably around ~35-40k profit after taxes/expenses. Some details; property is a bit of a PITA, we don't love the HOA and are having to be much more active in managing it than desired. Some capex expenses are coming; new roof via assessment, perhaps some other expenses inside the unit. And though it cash flows, it doesn't really hit the mark that we want. While a long term buy and hold is obvi a decent call, we also have a chance to simplify our lives and get some appreciation out.

The selling expenses I am aware of: LTCG tax, depreciation recapture, normal closing costs, etc. One downer for us is that we will have to pay some subsidy “claw back” costs because we are self-employed and use ACA insurance. Aside from the above, am I missing other expenses for sale of rental property? And, who has thoughts in regard to our final decision? TIA!

[Ronald Allen Barney]

I would look into a 1031 exchange for a less toxic property, and in your due diligence (check the roof next time!) estimate the cost of hiring a property manager to also achieve that simplification of your life.  Capital Gains will be deferred.