when to convert my apartments to condos

[David W.]

Hi.  I am about to finish a three unit building and will rent the units out.  Within five years however, I will look to sell the units.  I would need then to make them into condos if I want to sell each unit separately.  I was told by an attorney that it would be best to condo them now and not wait until i decide to sell them because the IRS might consider the gains to be short term capital gains even though I have held them longer than one year.  He felt that it would be safer to condo them now even though I don't plan to sell them until later.  Firstly, does anyone know if t his is true.  Secondly, even if true, having to pay higher taxes as condos now plus the possibility of selling the entire building to one buyer later, might be a reason to not condo them now.  If anyone has any insight into this issue, please help.  Thanks.