Should I Sell or Hold My Investment Property?
- Feb 23
- 3 min read
Updated: Mar 17
Should I sell or hold my property?
This isn’t just about market timing. It’s about capital gains tax, cash flow, borrowing capacity and long term wealth strategy.
Many investors focus on rising interest rates or recent property price growth. Fewer take the time to properly assess the tax implications of selling an investment property versus holding it.
Making the wrong move can mean paying unnecessary capital gains tax (CGT) or holding a property that no longer aligns with your financial goals.
Before you decide, it’s important to understand the numbers behind both options.
What happens tax wise if you sell?
When you sell an investment property, the main tax consideration is capital gains tax (CGT).
Your capital gain is generally calculated as:
Sale price – Purchase price – Eligible costs
Eligible costs may include:
Stamp duty
Legal fees
Selling agent fees
Capital improvements
If you’ve owned the property for more than 12 months, individuals and trusts may be eligible for the 50% capital gains tax discount.
However, selling can significantly increase your taxable income in that financial year. This may push you into a higher marginal tax bracket and increase the overall tax payable.
Before selling, you should model:
Your estimated capital gain
Your total taxable income for the year of sale
Whether delaying the sale to a different financial year could reduce tax
Timing can make a substantial difference.
When holding an investment property makes more sense
Holding may be the better strategy if:
The property is located in a strong long term growth area
The rental income supports manageable cash flow
Selling would trigger a large capital gains tax bill
You are focused on long term wealth creation
From a tax perspective, holding allows you to:
Continue claiming depreciation deductions
Claim ongoing interest expenses
Defer capital gains tax
Deferring CGT can be powerful. If your income is expected to decrease in future years, such as approaching retirement, selling later may result in a lower tax outcome.
Holding is not about avoiding decisions. It is about ensuring the property still fits your strategy.
Should you sell and buy another investment property instead?
Some investors consider selling in order to upgrade or expand their portfolio.
Buying another investment property may make sense if:
You have sufficient borrowing capacity
Your cash flow can support additional debt
Your ownership structure is appropriate
However, buying without reviewing your tax position can create inefficiencies.
Important factors to assess include:
Land tax exposure
Ownership structure (personal name, trust or company)
Risk management and asset protection
After tax cash flow
Property investment should be strategic, not reactive.
Common mistakes when deciding to sell or hold
We often see investors make decisions based on emotion rather than analysis.
Common mistakes include:
Selling due to short term market fear
Ignoring capital gains tax implications
Failing to model after tax outcomes
Forgetting selling costs and transaction expenses
Making decisions without aligning to long term goals
The right answer depends on your income, risk tolerance, life stage and broader financial plan.
What should you do before making a decision?
Before you sell or hold your investment property, we recommend:
Calculating your estimated capital gains tax
Reviewing your cash flow position
Assessing long term growth potential
Considering alternative strategies such as refinancing
Aligning your decision with your overall wealth plan
Tax should not be the only factor in your decision, but it should always be considered.
Need help deciding whether to sell or hold?
If you’re unsure whether selling or holding your investment property makes more sense tax wise, Rise Accountants our team of Brisbane accountants can help you with the numbers before you commit.