After years of owning and managing commercial property in Northern Virginia, many retired or soon-to-be-retired owners reach a turning point. The responsibilities that once seemed manageable—tenant issues, maintenance headaches, property taxes—now feel like burdens you’d rather leave behind. If you own commercial real estate in Alexandria, Arlington, Fairfax County, or the Dulles Corridor and you’re ready to sell, you’re probably asking yourself: “What do I do with the proceeds?”
The answer depends on your financial goals, tax situation, and vision for retirement. With Northern Virginia’s strong commercial real estate market performance over the past decades, many retiring owners are sitting on substantial appreciation. This makes tax planning even more critical. Here are five strategies worth considering when you sell your commercial property.
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Invest in Opportunity Zone Funds
Opportunity Zones were created to encourage investment in economically distressed communities. They also offer compelling tax benefits for Northern Virginia property sellers. By reinvesting your capital gains into a qualified Opportunity Zone fund within 180 days of your sale, you can defer paying taxes on those gains.
The real advantage comes with patience. If you hold the Opportunity Zone investment for at least ten years, any appreciation in the fund is completely tax-free. This strategy works well if you’re comfortable with the investment risk and timeline, and if you want to keep your capital working while minimizing your tax hit.
Northern Virginia Opportunity Zones
Several designated Opportunity Zones exist throughout the region, including areas in Alexandria and Arlington, making this strategy particularly relevant for local property sellers looking to reinvest close to home while taking advantage of significant tax benefits.
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Use Tax-Loss Harvesting to Offset Capital Gains
If you have other investments that aren’t performing well (stocks or securities sitting at a loss) selling them strategically can offset the capital gains from your Northern Virginia commercial property sale. This approach, called tax-loss harvesting, allows you to reduce your overall tax liability by balancing gains with losses in the same tax year.
This option requires careful coordination with your financial advisor and a clear picture of your entire investment portfolio. It’s particularly useful if you’ve been holding underperforming assets and were looking for a reason to exit those positions anyway. Many Alexandria and Arlington property owners have successfully used this strategy to minimize their tax burden when selling appreciated commercial real estate.
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Structure an Installment Sale aka Owner Finance the Sale
Rather than receiving all your proceeds at closing, you can arrange for the buyer to pay you over time through an installment sale. This spreads your capital gains tax liability across multiple years, potentially keeping you in a lower tax bracket each year and reducing your overall tax burden.
An installment sale can also provide you with a steady income stream in retirement, almost like creating your own pension. The downside is counterparty risk: you’re essentially financing the buyer’s purchase, which means you need confidence in their ability to make payments over the agreed-upon term. Proper documentation and security (such as a deed of trust) are essential when structuring an installment sale for commercial property in Virginia.
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Establish a Charitable Remainder Trust (CRT)
For Northern Virginia commercial property owners with philanthropic goals, a Charitable Remainder Trust offers an elegant solution. You transfer your property into the trust, which then sells it without paying immediate capital gains tax. You receive an income stream from the trust for a set period, and whatever remains eventually goes to your chosen charity.
This strategy provides three benefits: an immediate charitable tax deduction, ongoing income, and the satisfaction of supporting a cause you care about. It works best if charitable giving is already part of your retirement plan and you don’t need access to the full sale proceeds immediately. Many retiring professionals in Alexandria, Arlington, and Fairfax County have found CRTs to be an ideal way to transition out of commercial property ownership while supporting local nonprofits.
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Pay the Tax and Enjoy Your Retirement
Sometimes the simplest answer is the right one. You can sell your commercial property, pay the capital gains tax, and invest the net proceeds in a diversified portfolio. Or better yet, use the money to fund the retirement you’ve always dreamed about.
After decades of dealing with tenants, maintenance calls, and property management in Northern Virginia’s competitive market, there’s real value in liquidity and simplicity. Whether that means traveling, spending time with family, pursuing hobbies, or simply having peace of mind, paying the tax and moving on can be liberating. Working with a financial advisor, you can create an investment strategy that provides income, growth potential, and less day-to-day involvement than managing commercial real estate.
Making the Right Choice for Your Northern Virginia Commercial Property
Each of these options has different tax implications, risk profiles, and lifestyle impacts. The right choice depends on your specific situation: How much will you owe in capital gains? What are your income needs in retirement? Do you want to stay invested in real estate, or are you ready to diversify? Are charitable goals important to you?
As a commercial real estate broker I’ve worked extensively with retiring property owners throughout Alexandria, Arlington, Fairfax County, and the Dulles Corridor. I’ve seen how meaningful these decisions can be. The sale of your property isn’t just a transaction, it’s a transition to the next chapter of your life. Taking time to understand your options and working with qualified tax and financial advisors will help ensure that chapter is everything you want it to be.
Frequently Asked Questions About Selling Commercial Property in Northern Virginia
What are the capital gains tax rates for commercial real estate in Virginia? Federal capital gains rates range from 15% to 20%, plus a 3.8% net investment income tax for higher earners. Virginia also imposes a state capital gains tax of 5.75%. Combined, Northern Virginia commercial property owners can face total capital gains taxes of approximately 25-30%.
How do I find a qualified Opportunity Zone fund in Northern Virginia? Work with a financial advisor who specializes in Opportunity Zone investments. Many funds focus on specific regions, and several target Northern Virginia development projects. It’s essential to evaluate the fund’s track record, investment strategy, and alignment with your risk tolerance.
Should I work with a tax advisor before selling my commercial property? Absolutely. The tax implications of selling commercial real estate in Northern Virginia can be substantial. Meeting with a CPA or tax attorney before listing your property allows you to plan strategically and structure the sale in a way that minimizes your tax burden.
How long does it typically take to sell commercial property in Northern Virginia? Market conditions vary, but commercial properties in prime locations like Alexandria’s Old Town, Arlington’s Rosslyn-Ballston Corridor, and the Dulles Corridor typically take 6-12 months to sell. Properties in secondary locations or those requiring repositioning may take longer.
Ready to Explore Your Options?
If you own commercial property in Alexandria, Arlington, Fairfax County, or elsewhere in Northern Virginia and are considering your exit strategy, let’s discuss your specific situation. With over 20 years of experience helping Northern Virginia property owners navigate these transitions, I can connect you with the right tax and financial professionals while ensuring you get maximum value for your property.
At Tartan Properties Commercial, we specialize in working with retiring business owners who want a trusted advisor to guide them through the complexities of selling commercial real estate. Contact us today for a confidential consultation about your options.
Mike Porterfield is the owner of Tartan Properties Commercial, a real estate brokerage specializing in office, industrial, and flex properties in Northern Virginia. He can be reached at [email protected].