Agree with the poster who says be cold blooded about this. It is an investment! Also, be crystal clear in your response to the tenant and make sure that if you tell the tenant verbally you follow up with the response in writing. People hear what they want to hear, not necessarily what is said.

How old are you? If you aren’t likely to die anytime soon, but are close to retirement, maybe consider selling.

Be cold blooded about this, OP. It is an investment like any other in your portfolio. Easy enough to find another good tenant.

Unless your children actually want this property, just sell. You got hit with the lucky stick. Don't be greedy over capital gains taxes.

Anonymous wrote:I would gladly accept the offer. Offloading a property at fair value, saving 5% on agent fees, and not having to do any repairs or prepping for a public sale, all sounds like a huge win to me.

Agree. Only OP knows the basis, depreciation recapture, assuming no NIT 3.8%. A great tenant for 5 years wants to buy the property. That tenant is ready to be a homeowner. So the tenant will shop for a property and OP will be in the market for a replacement tenant.

Could be a nightmare on rent payments and just not worth the hassle since OP has made the $ out of the property.

Tell us about the upgrade the tenant made.

OP, hold the real estate unless you've got a 1031 exchange in mind.

I'm curious about the motivation behind the "considerable upgrades" tenant made to the property. Did you give tenant reason to believe he could buy the rental?
If not, it seems sleazy, weird, disingenuous and manipulative for the tenant to have invested in "considerable upgrades" with the expectation that you would feel guilty about it and let him buy it...

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It's a tax bomb, so consider the best timing before you sell it. Maybe better to let your heirs inherit it.

This is OP. I’m thinking of the inheritance to kids as the best approach to avoid the tax hit.

You could also 1031 exchange it into a property in an area you want to retire in, then rent it out until you retire and move in.

We’re already living where we want to retire.

OK so you’re retired already. Do you depend on the rental income for your retirement income? Do you want to continue your landlord job during your retirement? Also consider how much work it will take once this five-year tenant leaves to rent it out again, and how much more rent you will get if you haven’t been bumping up the rent annually.

You will lose the tenant within a year but if the taxes are your big tentpole that's that.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It's a tax bomb, so consider the best timing before you sell it. Maybe better to let your heirs inherit it.

This is OP. I’m thinking of the inheritance to kids as the best approach to avoid the tax hit.

You could also 1031 exchange it into a property in an area you want to retire in, then rent it out until you retire and move in.

We’re already living where we want to retire.

Anonymous wrote:

Anonymous wrote:It's a tax bomb, so consider the best timing before you sell it. Maybe better to let your heirs inherit it.

This is OP. I’m thinking of the inheritance to kids as the best approach to avoid the tax hit.

You could also 1031 exchange it into a property in an area you want to retire in, then rent it out until you retire and move in.

Anonymous wrote:It's a tax bomb, so consider the best timing before you sell it. Maybe better to let your heirs inherit it.

This is OP. I’m thinking of the inheritance to kids as the best approach to avoid the tax hit.