How to Exit Rental Property Without Paying Capital Gains | Ashley Romiti

Most rental property owners spend decades building a portfolio and almost no time planning how to get out of it. That is an expensive gap. When a long held property sells, the combination of capital gains tax and depreciation recapture can consume most of the equity, and owners in high tax states can face rates above 40 percent. In this episode, Ashley Romiti of GCA 1031 walks through the real estate exit strategies available to owners who want out of active management without triggering that bill, including 1031 exchanges, Delaware Statutory Trusts, Opportunity Zone funds, and 721 UPREIT conversions.

About Ashley Romiti

Ashley Romiti is the founder and president of GCA 1031. She has spent nearly 15 years working with retiring real estate investors nationwide, helping owners who have held property for decades understand their basis, their tax exposure, and their options before they sell. Much of her current work involves placing investors into Delaware Statutory Trusts.

What We Cover in This Episode

• Why depreciation recapture is the most overlooked number in an exit, and how the 25 percent rate stacks on top of capital gains
• What the first conversation with a retiring investor looks like: basis, tax exposure, income needs, and legacy goals
• Why baby boomer owners are driving most exit activity, and why so many of them are selling out of California
• How a step up in basis at death erases both capital gains and depreciation recapture, and how it applies inside a DST
• 1031 exchange basics, including the requirement to replace both equity and debt
• Why triple net lease replacement property has become less favorable: one property, one market, one tenant
• What a Delaware Statutory Trust is, how the sponsor structure works, and what a 1 percent ownership position actually gets you
• The $100,000 DST minimum and how owners spread a single sale across multiple funds to diversify
• How DSTs solve the 45 day identification problem when quality replacement inventory is scarce
• The real risks in a DST: no voting rights, no control over the sale, illiquidity, and full dependence on the sponsor
• How DSTs simplify an estate when multiple heirs would otherwise have to agree on what to do with a building
• Opportunity Zone funds, the shift from OZ 1.0 to OZ 2.0 in 2027, and why you only reinvest the gain rather than the full sale price
• The tax free exit after a 10 year Opportunity Zone hold, and why these funds usually produce little early cash flow
• How a 721 UPREIT works as a two step move from DST into REIT operating units, and why you cannot exchange directly into REIT shares
• How Ashley uses AI to underwrite deals and screen private placement memorandums for red flags

Key Insight

Ashley has run the numbers for owners who built wealth over 30 years and found that if they simply sold and did nothing else, they would walk away with close to nothing. Capital gains, depreciation recapture at 25 percent, state tax, and a loan payoff can consume the entire gain. In California she sees clients facing north of 40 percent. The decision most owners treat as a price question is actually a tax question.

Why This Episode Matters

If you own rental property, it will eventually be sold, exchanged, or inherited. Knowing which of these strategies fits your basis and your goals is the difference between preserving decades of equity and handing a large share of it to the IRS. Ask your CPA for two numbers before you do anything else: your adjusted basis and your total capital gains exposure.

Find Out More

Website: GCA1031.com

LinkedIn: linkedin.com/in/ashley-romiti-dst

Sponsors

Today's episode is brought to you by Green Property Management, managing everything from single family homes to apartment complexes in the West Michigan area. https://www.livegreenlocal.com

And RCB & Associates, helping Michigan-based real estate investors and small business owners navigate the complex world of health insurance and Medicare benefits. https://www.rcbassociatesllc.com