Off Market Hail Mary
Or How We Helped Our Client Avoid a Capital Gains Hit in Less than a Week
When a past client came to us with a tricky situation, we knew they needed some guidance to make the best decision.
The scenario: They had moved out of their Boston home in 2021, rented it out, and were now living in a rental that better suited their needs. They weren’t sure whether to keep renting their old home or sell it to buy a new primary residence.
We offered to do a Comparative Market Analysis (CMA) to estimate what they might make if they sold, but we quickly realized there was more to consider.
The house had been rented out since September 2021, and with September 1, 2024, fast approaching, they were on the clock to avoid a significant capital gains tax. The “2-out-of-5” rule was crucial here: to sidestep the 20% tax on the sale, they needed to have lived in the property as their primary residence for at least two of the last five years.
With the deadline looming, we knew we had to act fast. I guided them through the options: sell the house off-market at a lower price to meet the deadline or list it on the market and risk the capital gains tax. We talked through the implications of both scenarios, considering how avoiding a $40K federal tax hit—and additional state taxes—might make an off-market sale more appealing, even if it meant a slightly lower sale price.
The timeline was tight, but with the tenants’ lease ending on August 31, we saw a window of opportunity. Our team got to work immediately. By Friday morning, we had the listing paperwork signed. By 5 PM, we had a property website built, a detailed FAQ ready, and an announcement sent to over 2,700 agents and contacts. Showings were already being scheduled before the day was out.
By Sunday, a buyer made an offer that exceeded the seller’s expectations and met their tight timeline!! From signing the listing paperwork on Friday to accepting an offer by Sunday, we worked together to navigate a very challenging situation.
In the end, the sellers were able to avoid the capital gains tax and move forward toward their next chapter, feeling confident in their decision. We were just there to help them find the best path forward and support them every step of the way.
