For Owners of Duplexes, Fourplexes and Rental Portfolios
Selling a Duplex, Fourplex or Rental Portfolio in Seattle: Options, Taxes and Exit Plan
By Emily Cressey, Broker, HomePro Associates at Keller Williams Greater Seattle. Updated October 2026.
Dear Neighbor, you built something. Maybe it is a duplex you bought decades ago, or five to ten rental houses you added one at a time. The properties have gained value, the equity is large, and the work has not gotten any smaller. I own rentals myself, so I know how much time and worry they take.
If you are asking whether it is time to sell, you are not alone. Here is how I help owners compare their choices, understand the taxes at a high level, and sell in an order that makes sense.
Why Owners of Two to Ten Rentals Start Thinking About Selling
The reasons I hear most often are simple and very human.
A lot of equity earning a small return
Properties bought years ago may now be worth many times what you paid. The rent has risen too, but not as fast as the value. That leaves a large pile of money earning a modest return for the hassle.
Fewer hours and fewer headaches
Tenant calls, repairs, turnovers, inspections and paperwork do not slow down as you get older. For many owners, the most valuable thing a sale gives back is time.
Heirs who do not want the job
Owners with several rentals often realize their children live elsewhere, have careers of their own and do not want to manage tenants. Planning the sale yourself gives you more control than leaving it to the estate.
Rising costs and rules
Insurance, taxes, repairs and tenant rules all change. When an old building needs a new roof, a sewer line or a boiler, the question is whether more money should go into it.
A Simple Return Check: What Is Your Equity Earning?
Here is a quick test I use with owners. It is not an appraisal or investment advice, just a way to see the problem. This is an example, not a real client.
- A fourplex is worth about $1,600,000 and you owe $400,000, so your equity is about $1,200,000.
- The building brings in $8,000 a month in rent, or $96,000 a year.
- After taxes, insurance, repairs, vacancies and utilities you keep about $48,000 a year before mortgage payments and income tax.
- The mortgage costs about $20,000 a year, so you keep about $28,000.
- That is about 2.3 percent a year on $1,200,000 of equity.
That number is worth comparing with the other places your money could work, and with the hours you spend. It does not mean you should sell. It means you should know it, because many owners have never calculated it. If the return is low and the work is high, selling deserves a serious look. If you are building toward the next property, it may not.
Your Exit Options When You Own Small Multifamily or Several Rentals
There is more than one way out. Each has trade-offs, and the right answer depends on your age, goals and taxes. I am not a tax advisor, so use this to prepare questions for your CPA.
Sell and pay the tax
You sell, pay the taxes due and walk away with cash. It is the simplest path. The tax can be large, especially if you have owned for many years, so know the number first.
Use a 1031 exchange into another property
A 1031 exchange lets you defer tax by trading into another investment property. The rules are strict: you identify a replacement within 45 days and close within 180 days, using a qualified intermediary. See my page on 1031 exchanges for Seattle investors and the IRS real estate tax tips for like-kind exchanges.
Exchange into a Delaware Statutory Trust (DST)
A DST lets an investor own a share of a larger property, such as an apartment community, without managing it. Some owners use DSTs as the replacement property in a 1031 exchange. They are usually open only to accredited investors, they are hard to sell later, and they carry fees and risks. I am a real estate broker, not a securities advisor, so talk with a qualified financial professional before considering one.
Sell with seller financing
Some owners carry a loan for the buyer and spread the sale and the tax over time. This can work for the right property and buyer, but it adds risk. Have an attorney draft the documents.
Keep it until your heirs inherit
When someone inherits property, the tax basis generally resets to the value at the date of death. This can wipe out the deferred gain that would have been taxed in your lifetime. It is also a reason some owners keep property longer. The IRS explains basis in Publication 551. Ask your CPA how this works with your estate plan.
Taxes to Understand Before You List
- Capital gains. The profit on a sale of a long-held property is generally taxed at long-term rates. Topic 409 at the IRS explains the basics: Capital gains and losses.
- Depreciation recapture. The depreciation you took over the years is usually taxed at a different rate when you sell. Many owners are surprised by this number.
- Washington real estate excise tax. The seller pays it at closing on the sale price. Your escrow officer can give you the exact figure.
- Washington capital gains excise tax. It does not apply to the sale of real estate, but other sales in the same year could matter. Ask your CPA.
The most useful thing I can do is give you the sale price estimate quickly so your CPA can run the tax numbers before you decide.
Selling a 2 to 4 Unit Building: Who Buys It and What Tenants Mean for the Sale
Small buildings attract three kinds of buyers. Owner-occupants who live in one unit and rent the others, often called house hackers, can use FHA or VA loans on two to four units. Small investors want rent and growth. Cash buyers and 1031 buyers want speed and clean terms. Each prices the building a little differently, and I market to all three.
Tenants matter. Washington law requires advance written notice before you enter a tenant’s unit for showings. The details are in RCW 59.18.150. Leases, security deposits and rent rolls transfer to the buyer, and Seattle has its own tenant rules, including just-cause and relocation requirements. Talk to an attorney before you end any tenancy to sell. Good tenants who pay on time can be a plus to an investor buyer, and I will show you how to present that.
If you are thinking about selling one rental, not a group, my page on selling a rental property in Seattle goes through that case.
Selling Several Properties: Order, Timing and Packaging
- Start with the weakest. Sell the property with the lowest return, the heaviest repairs or the most difficult tenant first.
- Spread sales across years if it helps your taxes. Your CPA can tell you whether staggering reduces the bill.
- Sell individually, not as a package, in most cases. Buyers for single buildings are more plentiful than buyers for a portfolio.
- Plan the 1031 chain early. If you want to exchange, line up the intermediary and the target property before you list.
- Do a repair walk on each building. Small fixes before listing can raise the price more than they cost.
My own rentals have taught me to look at each building by what it earns and what it needs, not by habit. I am happy to do that review with you.
What I Do Before We List a Building
- Collect the rent roll and expenses. Leases, rents, deposits, taxes, insurance, utilities and repair history for the last two years.
- Walk each unit and the building. I note deferred repairs, safety items and what a buyer’s inspector will likely find.
- Value it as buyers will. I compare it to recent sales of similar buildings and run the return a buyer would calculate.
- Decide how to present it. Occupied, partly vacant or fully vacant each changes the price and the timing.
- Line up your advisors. Your CPA, attorney and 1031 intermediary, if you plan to exchange, should hear the plan before we list.
- Market to every kind of buyer. House hackers, small investors and cash buyers each see the property in their own way.
Questions Owners Ask About Selling Small Multifamily and Rentals
Do I have to sell if the tenants are still in the building?
No. Many buildings sell with tenants in place. The tenants’ leases and rents become part of what the buyer is buying. I will help you plan notices, showings and what the buyer will want to see.
What is the difference between a 1031 exchange and a DST?
A 1031 exchange is a tax rule that lets you defer tax by trading into other qualifying property. A DST is one type of investment that some owners use as that replacement property. A DST is not required. Talk to your CPA and a securities professional.
How is a fourplex valued?
Buyers look at rents, expenses and the return the building produces, not just at nearby sale prices. I prepare a rent and expense analysis for you before we set a price.
Should I sell before my heirs inherit?
There is no one right answer. It depends on your taxes, your goals and your family. This is a good question for your CPA and attorney together.
Can I sell just one building in my portfolio?
Yes. Many owners sell one property at a time, starting with the one that does the least for them.
Want to Know What Your Buildings Could Sell For?
Call or text me at (206) 245-8813. I will give you a price estimate and a rent and expense review on each property, so you and your CPA can compare your options.