There are many legal steps involved in the sale of a building, including a commercial property inspection. You should consider using a licensed real estate attorney to handle the sale. Listed below are some tips for a smooth transaction. Read on to learn about tax implications of the sale and choosing an attorney. Keep in mind, however, that your month-to-month tenant can continue to live in the building after the sale. In addition, you’ll want to avoid making any last-minute arrangements.
Tax implications of selling a building
Several factors determine the tax implications of selling a building. While the buyer would like as much of the selling price as possible allocated to tax-deductible costs, the seller would prefer to allocate a portion of the price to depreciating assets. These two factors may lead to conflicting positions in negotiations, which might cause the seller to make concessions on the terms and price. Another factor that affects the tax bill is the deal structure. A seller who accepts the sale price in installments can defer the tax until payments are received.
Ideally, the seller will allocate as much of the purchase price as possible to capital assets. In this way, the proceeds of the sale will be taxed as capital gains. The sale of a building will also trigger capital gains. However, the sale of inventory will result in ordinary income. A sale will determine the allocation of the purchase price between the assets. Those with rental property should consider this aspect when selling their building.
Choosing an attorney
Choosing an attorney for the sale of resale is a challenging process, but there are a few things you should look for. First, make sure your attorney is empathetic and has a track record in this area. Ask around and consider any professional referrals from other professionals. Finally, choose an attorney with a reputation for excellence. It can be a tough decision, but remember that this is a very personal matter.
Getting a commercial property inspected
Getting a commercial property inspected before selling a building is a smart idea. In the past, most commercial property transactions were “As Is,” meaning that most buyers didn’t do a physical inspection of the building before buying it. They relied instead on the seller’s operating plans and maintenance reports. Contracts also state that a buyer should make maintenance and replacement reserves, up to the amount the seller budgeted for it. However, smart buyers plan for higher reserves.
If a building has code violations, it will take more time to sell. If the building is in violation of building codes, the seller may have to pay for remedial work or risk having the buyer walk away. Code violations don’t disappear when the building is sold – they simply become the new owner’s problem. And even if you’re able to resolve the problem, you’ll still be liable for any fines, penalties, or liens.
Keeping a month-to-month tenant after the sale
If you’re considering selling a building, a month-to-month lease may be the best option for you. This type of lease provides landlords with the most flexibility when it comes to rental agreements. However, if you decide to end a month-to-month tenant’s tenancy for any reason, you’ll need to give a substantial amount of notice. Generally, you should give your tenant a full 30 days’ notice.
Generally, landlords will be more lenient with month-to-month tenants if the property is vacant for long periods of time. Nonetheless, landlords must be aware that delinquent tenants can undermine the sale of a building. Whether you choose to forgive the tenant or evict them, you must be considerate of their needs. Unhappy tenants can cause major problems for your sale, such as preventing showings or stopping cleaning.