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I’m trying to figure out if I should sell my first rental property now or hold it longer. The market in my area feels high, but I’m worried about the tax hit from depreciation recapture eating up a lot of my profit if I sell.

I was in that same boat last year. The market felt high and I figured I’d cash in while the getting was good, but the depreciation recapture hit when I sold caught me off guard. I wish I’d done a tougher after tax check before pulling the trigger.

I ended up holding another year. The rents still covered the mortgage and maintenance was manageable, so I figured I could ride the next swing. When I finally sold, the tax bite still stung, but it wasn’t as bad as I feared because I’d owned it longer.

I talked to a CPA and asked them to run two scenarios, one now and one with a hold, to compare after-tax cash flow. The numbers were clear enough, but the nerves about timing and reinvestment kept winning out.

Do you actually need the liquidity now, or is the real problem something else like management fatigue or loan terms?

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