Legal Question in Real Estate Law in California

This is a rather subjective question, with the "correct" answer dependent upon factors that are outside the realm of law. They include whether you need the money now, how much your capital gain would be upon selling. your age and your feelings regarding giving your heirs a valuable property, whether it is now producing income, your opportunities for reinvesting the proceeds, and so forth. Keep in mind that the capital gains tax would apply only to your gain, not your entire selling price, and that the tax rate is fairly low. You may want to consult with an experienced tax or estate planner.

I agree with Mr. Whipple that this is much more of a financial question than a legal one. He is also quite correct that it is a subjective question that depends on your financial situation and objectives. I bailed out of a rental property about a year into the market decline, because I calculated that the capital gains hit I would take was less than my lost value if the market continued to decline. It cost me about $75,000 in capital gains taxes, but the property lost another $100-$120K in value over the following two years. As the saying goes, however, your mileage may vary. Mr. Whipple also says the tax rate is low. Again, that is subjective. Yes, the federal capital gains rate is fairly low compared to many people's regular income tax rates, but the state rate is the same as on regular income. So the total tax on your gain will be about 25%. I don't consider that low. You may.