Selling an Investment Property in Alexandria: Tax & Buyer Strategy
Quick Answer: Selling an investment property in Alexandria, VA typically triggers federal capital gains tax (0%, 15%, or 20%), 25% depreciation recapture, 5.75% Virginia state tax, and possibly the 3.8% Net Investment Income Tax. A 1031 exchange can defer all of it. The right buyer strategy — targeting owner-occupants, fellow investors, or 1031 exchange buyers — can swing your net by tens of thousands.
Selling an investment property in Alexandria is a different exercise from selling a primary residence. The math is messier, the buyer pool is narrower, and the tax bill can quietly eat 20–35% of your gain if you walk in without a plan. From an Old Town condo to a Del Ray duplex to a Landmark townhome held through three tenants, the choices you make in the 90 days before listing — pricing, presentation, exchange timing, tenant status — usually matter more than anything that happens on contract day.
This guide walks through the four tax layers that hit Alexandria landlords, when a 1031 exchange makes sense (and when it doesn't), how to position the property to the right buyer pool, and what selling vacant vs. tenant-occupied actually costs you. It also includes a closing-cost breakdown built around current Alexandria fee structures and a side-by-side savings calculator showing exactly what a 1.5% full-service listing leaves in your pocket versus a traditional 3% agent.
The Jamil Brothers Realty Group has closed 840+ DMV transactions and works with investor-sellers across Alexandria, Arlington, and Fairfax County every month. Everything below reflects how investment-property sales actually play out in this market in 2026 — not the generic national playbook.
Key Takeaways
- Investment property sales in Alexandria face four separate tax layers: federal capital gains, depreciation recapture (25% federal), Virginia state tax (5.75%), and potentially the 3.8% Net Investment Income Tax.
- A properly structured 1031 exchange defers all of it — but the 45-day identification window starts the day you close, and missing it is a six- or seven-figure mistake.
- Selling vacant typically nets 3–8% more than selling tenant-occupied, but you trade rental income, holding costs, and a 2–4 month gap.
- Alexandria has three distinct investor-buyer pools: out-of-state 1031 buyers, local owner-occupants (especially federal workers and military), and small-portfolio landlords. Each requires different positioning.
- Closing costs for Alexandria investors run roughly 1.0–1.5% of sale price, plus commission. The 1.5% full-service listing program from The Jamil Brothers Realty Group keeps an extra $9,000–$15,000 in your pocket on typical Alexandria price points.
- Capital improvements increase your cost basis and directly reduce your taxable gain — keep every receipt going back to the year you bought the property.
In This Guide
- The Alexandria Investment Property Market Right Now
- Capital Gains Tax: What You'll Actually Owe
- The 1031 Exchange Strategy (Defer the Tax)
- Depreciation Recapture: The Overlooked Tax
- Cost Basis & Reducing Your Taxable Gain
- Buyer Strategy: Who Buys Investment Properties in Alexandria
- Sell Tenant-Occupied or Vacant?
- Pricing Strategy for Alexandria Investment Properties
- Closing Costs & Commission Math
- Seller Savings Calculator
- Step-by-Step Sale Timeline
- Your Path Forward
- Frequently Asked Questions
- Glossary
The Alexandria Investment Property Market Right Now
Alexandria sits in a structurally strong rental market. Federal workforce demand, military relocations from the Pentagon and Fort Belvoir, Amazon HQ2 spillover from National Landing, and a steady stream of contractors and Foreign Service personnel keep occupancy high. According to BrightMLS data, Alexandria's average days on market for residential listings under $1M has held in the mid-teens through early 2026, with list-to-sale ratios hovering near 99–101%. That backdrop matters when you're selling an investment property: buyers know the rental fundamentals, which means cap-rate-driven investor buyers are real and active.
Pricing varies sharply by submarket. Old Town and Del Ray command premiums; West End, Landmark, and the southern stretches of Route 1 offer lower entry points and higher cap rates. Below is a snapshot of where typical investment property values fell across Alexandria submarkets at the start of 2026 — these are starting points, not appraisals.
| Submarket | Typical Condo Range | Townhome/Duplex Range | Typical Investor Profile |
|---|---|---|---|
| Old Town | $525K–$900K | $850K–$1.6M | Long-hold, low-turnover |
| Del Ray | $425K–$650K | $750K–$1.3M | Owner-occupant transition |
| Eisenhower / Carlyle | $400K–$700K | $650K–$950K | Yield-focused, tech-tenant heavy |
| Rosemont | $475K–$700K | $800K–$1.4M | Metro-adjacent, federal renter base |
| Landmark / West End | $275K–$475K | $550K–$800K | Cash-flow investors, higher cap rate |
| Potomac Yard | $500K–$850K | $750K–$1.2M | Newer build, Amazon/Metro premium |
The implication: your buyer pool changes depending on submarket. A Landmark condo is sold to a cash-flow investor; an Old Town two-bedroom is sold to either an owner-occupant or a wealth-preservation buyer who values capital appreciation. Pricing and marketing have to follow.
Capital Gains Tax: What You'll Actually Owe
Unlike a primary residence, an investment property gets no Section 121 exclusion. There's no $250,000 (single) or $500,000 (married) tax-free gain — every dollar above your adjusted basis is taxable. The federal rate depends on how long you held the property and your taxable income for the year of sale.
| Holding Period | Federal Rate | Applies When |
|---|---|---|
| Under 1 year | Ordinary income (10–37%) | Short-term — taxed at your regular bracket |
| 1 year+ | 0% | Taxable income up to $48,350 single / $96,700 married (2025) |
| 1 year+ | 15% | Most middle and upper-middle income filers |
| 1 year+ | 20% | Taxable income above $533,400 single / $600,050 married (2025) |
On top of the federal rate, Virginia imposes its own income tax on the gain — capped at 5.75% for income over $17,000. There's no preferential capital gains rate in Virginia; the gain is treated as ordinary income. If your modified adjusted gross income is over $200,000 (single) or $250,000 (married filing jointly), you also owe the Net Investment Income Tax (NIIT) of 3.8% on the gain.
Stacked tax burden by income bracket (typical Alexandria investor)
Illustrative ranges. Consult a CPA for your specific situation.
A worked example: you bought an Alexandria condo in Carlyle for $400,000 in 2014, took $50,000 of cumulative depreciation, made $25,000 of capital improvements, and are now selling at $625,000 net of commission. Your adjusted basis is $400,000 + $25,000 − $50,000 = $375,000. Your total gain is $250,000. Of that, $50,000 is depreciation recapture taxed at 25% federal, and $200,000 is capital gain. At a 15% federal cap-gains rate plus 5.75% Virginia, you're looking at roughly $54,000–$60,000 in combined tax — before NIIT. That's why the next section matters so much.
Get a street-level valuation from The Jamil Brothers — based on real Alexandria comps, current rental data, and the buyer pool that matches your submarket. Response within 24 hours.
The 1031 Exchange Strategy (Defer the Tax)
A Section 1031 like-kind exchange lets you defer every dollar of capital gains tax and depreciation recapture — if you reinvest the proceeds into another investment property and follow the IRS timeline exactly. Your primary residence doesn't qualify; only properties held for investment or productive use in a trade or business do.
The Two Deadlines That Sink Most Exchanges
Identification Period — 45 days from closing
You must identify up to three replacement properties (or more under the 200% rule) in writing to your Qualified Intermediary. No extensions. Weekends and holidays count. Most failed exchanges fail here.
Exchange Period — 180 days from closing
You must close on one or more of the identified properties within 180 days of the original sale. Again, no extensions outside of federally declared disaster zones.
When a 1031 Makes Sense (and When It Doesn't)
| ✓ Strong 1031 Candidate | ✗ Weak 1031 Candidate |
|---|---|
| Large built-up gain you want to keep deploying | You need the cash for non-real-estate purposes |
| Already have replacement target identified or pipeline lined up | No replacement options in the budget that work |
| Want to upgrade portfolio quality (better neighborhood, newer build) | Heir step-up basis would erase the gain anyway (older sellers) |
| Trading up to higher cash-flow markets or property types | Permanently exiting rental ownership |
| Consolidating multiple smaller properties into one larger asset | Capital gain is small enough that QI fees + tax friction outweigh deferral |
If you decide to pursue a 1031, the Qualified Intermediary (QI) must be engaged before closing on your Alexandria property. Once you touch the proceeds, the exchange is dead. The QI holds the funds, prepares the documents, and confirms the timeline. Common QI fees run $750–$1,500 for straightforward residential exchanges.
⚠️ The "Boot" Trap
If your replacement property costs less than your sale price (after closing costs), the difference — called "boot" — is taxable. The same is true if you take less debt on the new property than you had on the old. To defer 100% of the tax, the replacement must be equal or greater in value and equal or greater in debt.
Depreciation Recapture: The Overlooked Tax
Every year you held the Alexandria property as a rental, you (or your CPA) likely depreciated the structure on a 27.5-year schedule. That depreciation lowered your tax bill annually — but the IRS gets that money back when you sell. The recapture is taxed at a flat 25% federal rate, on top of any capital gains tax. Many investors don't budget for this until their accountant delivers the bill in April.
A common mistake: not depreciating during ownership doesn't save you from recapture. The IRS treats depreciation as "allowed or allowable" — meaning whether you actually claimed it or not, recapture is calculated on what you could have claimed. If you skipped depreciation deductions while you owned the property, you're paying recapture without ever having received the benefit. File Form 3115 to fix this if it applies.
| Tax Layer | Rate | Applied To |
|---|---|---|
| Federal capital gains | 0% / 15% / 20% | Gain above adjusted basis (excluding depreciation portion) |
| Depreciation recapture (Section 1250) | 25% federal max | Cumulative depreciation taken or allowable |
| Virginia state income tax | Up to 5.75% | Entire gain (no preferential rate) |
| Net Investment Income Tax (NIIT) | 3.8% | Gain, if MAGI > $200K single / $250K married |
Cost Basis & Reducing Your Taxable Gain
Your taxable gain is sale price minus selling costs minus your adjusted cost basis. The single biggest lever in the months before listing is making sure your cost basis is fully documented and as high as legally defensible. Many landlords leave $10,000–$30,000 of basis on the table because they never tracked capital improvements properly.
Items that increase your cost basis
- Original purchase price
- Acquisition closing costs (title, recording, transfer taxes)
- HVAC, roof, water heater, electrical, plumbing replacements
- Kitchen and bathroom renovations
- Flooring replacement (not refinishing — that's repair)
- Window replacement, additions, garage conversions
- Capital assessments paid to HOA or condo association
- Selling-side costs at closing (commission, transfer tax, recording)
Items that DO NOT increase basis (these are repairs)
- Repainting, patching, caulking, light fixture replacement
- Carpet cleaning, appliance repairs (not replacements)
- Landscaping maintenance, gutter cleaning
- Tenant turnover cleaning and minor restoration
Repairs were already deducted as expenses on Schedule E in the year they happened — you don't get to count them twice by adding them to basis. The line between "capital improvement" and "repair" is the most common audit issue for investor sellers, so document the scope of work, contractor invoices, and before/after photos for anything over $2,500.
Buyer Strategy: Who Buys Investment Properties in Alexandria
Alexandria investment properties don't sell to one buyer pool — they sell to three. The right pricing, photography, and marketing approach depends on which pool your property fits best. Knowing this before you list usually means a 2–5% better outcome.
| Buyer Type | What They Value | Marketing Emphasis |
|---|---|---|
| Owner-occupants (federal workers, military, FSO, contractors) | Move-in condition, school zones, walkability, finishes | Stage vacant, drone, 3D tour, lifestyle photography |
| Local landlords (small portfolio, NOVA-based) | Cap rate, current rent, tenant quality, condition | Rent roll, expense ledger, capex history, lease term |
| 1031 buyers (out-of-state, deadline-driven) | Speed, certainty, clean title, financing optionality | Cooperative scheduling, fast inspections, pre-listing diligence package |
| Cash buyers / institutional | Discount to market, fast close, no financing risk | Sold at a discount; useful only if speed/condition matter more than price |
In most Alexandria submarkets, the owner-occupant buyer pool pays the highest price — usually 3–8% above what an investor will pay for the same property — because they're buying lifestyle, not cash flow. The catch: owner-occupants don't typically buy tenant-occupied homes, which forces a decision about your existing lease.
4K photography, drone video, 3D tour, expert negotiation, full MLS marketing, plus an investor-buyer outreach package — all included at 1.5%. On a $650K Alexandria property, you keep an extra $9,750 versus a traditional 3% listing agent.
Sell Tenant-Occupied or Vacant?
This is the single biggest pricing decision most Alexandria investor-sellers face. The math:
| Factor | Sell Tenant-Occupied | Sell Vacant |
|---|---|---|
| Expected sale price | 3–8% lower | Full market value |
| Buyer pool | Investors only | Investors + owner-occupants |
| Showing access | Limited, tenant-controlled | Unrestricted |
| Marketing photography | Lived-in, often cluttered | Staged, professional |
| Rental income during sale | Continues | Lost (2–4 months) |
| Days on market | Often longer | Typically shorter |
| Lease respected by buyer? | Yes — lease survives sale | N/A |
Virginia law says the lease runs with the property — a new owner inherits any active lease until it expires. That means if you sell tenant-occupied with a year left on the lease, the buyer cannot move in or substantially renovate until that lease ends. This single legal fact is why most owner-occupants won't even tour a tenant-occupied property unless the lease expires within 30–60 days.
The break-even calculation: if your monthly rent is $2,800 and you'd lose 4 months of rent during a vacancy ($11,200), but a vacant sale would net you 5% more on a $600K property ($30,000), going vacant is clearly the right call. The math flips at lower price points and tight cash flow.
ℹ️ Cash-for-keys is legal in Virginia
If your tenant is mid-lease and you want to deliver the unit vacant, you can offer a cash incentive to vacate early. Common Alexandria offers run $2,000–$5,000 plus return of security deposit. Always document in writing with a mutual lease termination agreement.
Pricing Strategy for Alexandria Investment Properties
Pricing an investment property is a different exercise from pricing a primary residence. You're often working off two different value frameworks at once: comparable sales (for owner-occupant pricing) and capitalization rate (for investor pricing). The higher of the two usually wins — but only if the property is marketed to attract the buyer pool willing to pay it.
Three pricing approaches for Alexandria investor sellers
Aggressive pricing means delivering vacant, professionally staging, and listing at the top of the owner-occupant comparable range. Balanced means accepting that you'll get investor pricing and a slightly longer DOM. Speed pricing makes sense only if you have a hard deadline — tax-year close, divorce, 1031 reverse exchange — that overrides every other consideration.
Closing Costs & Commission Math
Selling costs are deductible against your gain, so every dollar you pay at closing is one less dollar of taxable proceeds. Here's the Alexandria-specific cost stack:
| Cost | Typical Amount | Who Pays |
|---|---|---|
| Listing agent commission | 1.5–3% of sale price | Seller |
| Buyer's agent compensation (negotiable post-NAR) | 2–3% of sale price | Seller or buyer (negotiated) |
| Virginia state grantor tax | $1 per $1,000 | Seller |
| NOVA regional congestion tax | $0.15 per $100 | Seller |
| City of Alexandria recordation/clerk fees | $30–$80 | Seller |
| Settlement / escrow fee | $400–$700 | Seller |
| HOA/condo resale package + transfer fee | $200–$700 | Seller |
| Loan payoff / lien release | Outstanding balance | Seller |
| Prorated property tax | Varies by closing date | Seller |
| QI fee (only if 1031) | $750–$1,500 | Seller |
For a $650,000 Alexandria sale, non-commission closing costs typically run $1,800–$3,500 in seller-side fees — modest compared to the commission line. Which is why how you negotiate commission matters more than anything else on the page.
Seller Savings Calculator
How much more do you keep with our 1.5% listing fee?
Select your home's estimated value to see your real net proceeds — side by side.
|
Traditional Agent — 3%
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Jamil Brothers — 1.5%
Our Fee — Only 1.5%
|
Extra in your pocket
$6,000
vs. a traditional 3% listing agent — with zero reduction in service or marketing.
|
Traditional Agent — 3%
|
Jamil Brothers — 1.5%
Our Fee — Only 1.5%
|
Extra in your pocket
$7,500
vs. a traditional 3% listing agent — with zero reduction in service or marketing.
|
Traditional Agent — 3%
|
Jamil Brothers — 1.5%
Our Fee — Only 1.5%
|
Extra in your pocket
$9,000
vs. a traditional 3% listing agent — with zero reduction in service or marketing.
|
Traditional Agent — 3%
|
Jamil Brothers — 1.5%
Our Fee — Only 1.5%
|
Extra in your pocket
$11,250
vs. a traditional 3% listing agent — with zero reduction in service or marketing.
|
Traditional Agent — 3%
|
Jamil Brothers — 1.5%
Our Fee — Only 1.5%
|
Extra in your pocket
$15,000
vs. a traditional 3% listing agent — with zero reduction in service or marketing.
Estimates only. Closing costs vary. Buyer's agent commission is negotiable post-NAR settlement.
Step-by-Step Sale Timeline
A typical Alexandria investment property sale runs 90–150 days end to end. Compressing the timeline is possible but usually costs price. Here's the realistic sequence:
CPA & Tax Strategy Conversation — 30+ days before listing
Get a full estimate of expected tax. Decide if a 1031 exchange is in play. Pull your depreciation schedule. Identify your adjusted basis.
Tenant Decision & Notice — 60–90 days before listing
If selling vacant, give tenant proper Virginia notice (or negotiate cash-for-keys). If selling occupied, brief tenant on cooperative showings and stay on the right side of the Virginia Residential Landlord and Tenant Act.
Pre-Listing Prep — 2–4 weeks before listing
Address deferred maintenance, paint, light staging, professional cleaning. Pull HOA/condo resale package. Order pre-listing inspection if condition is uncertain.
Photography & Marketing — 1 week before listing
4K stills, drone, 3D tour, floor plan. Build dual marketing collateral — lifestyle for owner-occupants, financials for investors.
List & Show — days 1–14 on market
Hit BrightMLS, sync to all major portals, open house weekend one, broker outreach to investor lists. Most offers in Alexandria land in this window.
Contract & Due Diligence — 14–35 days
Negotiate, accept offer, manage inspection, appraisal, financing contingency. Investor buyers usually inspect quickly; owner-occupants take longer.
Closing & 1031 Funding — 30–45 days from contract
Funds wire to your QI (if 1031) or to you directly. 45-day identification clock starts at closing for 1031s.
If your 1031 deadline is tight, you have a problem tenant, or the property needs significant work, a cash offer may be the right fit. We'll walk you through your full range of options — no pressure.
Your Path Forward
Selling an Alexandria investment property well is mostly about decisions you make before the listing goes live: the tax strategy, the tenant question, the buyer pool target, and the commission structure. Done in that order, you end up with both a higher sale price and a meaningfully smaller tax bill — often the difference of $30,000–$80,000 on a typical Alexandria property.
If you're considering a sale in the next 6–12 months, the lowest-cost, highest-value next step is a real conversation about your specific property: its submarket, its tenant situation, your tax position, and what you want the sale to accomplish. The Jamil Brothers Realty Group runs a free, no-obligation seller consultation that covers all four. We work with investor-sellers across Alexandria, Arlington, and Fairfax County every month and bring the relationships with local title companies, 1031 Qualified Intermediaries, and tax-savvy CPAs that most listing agents don't.
You can also run your own custom net sheet to see your projected proceeds at different price points, or read more about the 1.5% full-service listing program — the same marketing as a traditional 3% listing, just without the inflated fee.
Know your equity, understand your costs, see the full tax picture, and walk into your sale with a real plan — before you commit to anything. The Jamil Brothers provide a full seller consultation at no cost or obligation.
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Alexandria Fairfax McLean Vienna Reston Ashburn Search Alexandria ListingsFrequently Asked Questions
How much tax will I pay when I sell my Alexandria investment property?
Federal capital gains tax (0%, 15%, or 20% depending on income), 25% federal depreciation recapture on cumulative depreciation taken, Virginia state income tax up to 5.75%, and the 3.8% Net Investment Income Tax if your modified AGI exceeds $200,000 single or $250,000 married. For most middle-to-upper-income Alexandria sellers, the combined tax burden runs 20–30% of the taxable gain. The exact number depends on your basis, holding period, depreciation, and total income for the year of sale — always confirm with your CPA.
Can I do a 1031 exchange on an Alexandria condo?
Yes — a condo held for rental or investment qualifies as like-kind under Section 1031. You can exchange into any other US investment real estate: another condo, a single-family rental, a multifamily property, a commercial building, or even raw investment land. The replacement does not need to be in Virginia. The 45-day identification and 180-day closing deadlines are strict, and you must use a Qualified Intermediary to hold the proceeds — touching the money directly disqualifies the exchange.
How long does it take to sell an investment property in Alexandria?
A well-prepared Alexandria investment property typically takes 90–150 days from the day you start prep to the day you close. About 30–45 days of that is pre-listing work (tenant decisions, repairs, photography, HOA package), 14–30 days is active marketing time, and 30–45 days is contract-to-close. Tenant-occupied sales can extend the timeline by 30–60 days due to access restrictions and a narrower buyer pool.
Should I sell my Alexandria rental occupied or vacant?
In most submarkets, selling vacant generates a 3–8% higher sale price because it opens the property to owner-occupant buyers who pay for lifestyle rather than cash flow. The trade-off is 2–4 months of lost rent plus carrying costs. The break-even math usually favors vacant on properties above $500,000, especially in Old Town, Del Ray, Rosemont, and Potomac Yard. In lower-priced cash-flow submarkets like Landmark and parts of the West End, tenant-occupied sales to other investors can be a cleaner exit.
How is buyer's agent commission handled after the 2024 NAR settlement?
Buyer's agent compensation is no longer pre-loaded into the listing agreement and is fully negotiable between buyer and buyer's agent. As a seller, you can choose to offer buyer-agent compensation (most do, especially in NOVA where it remains the market norm), negotiate it deal by deal, or decline it entirely. In Alexandria, the most common 2026 structure is sellers offering 2–3% to attract the widest buyer pool. Your listing agent should explain the trade-offs based on current local conditions.
How do I choose a listing agent for my Alexandria investment property?
Look for these objective criteria: documented sales history in your specific Alexandria submarket within the last 12 months, experience selling tenant-occupied or investor-owned property, written marketing plan with photography/3D/drone deliverables, transparent commission structure, and a written net sheet at the time of listing. Ask for a sample marketing package and references from prior investor-sellers. The Jamil Brothers Realty Group works extensively with investor-sellers across Alexandria and has closed 840+ DMV homes with $500M+ in transaction volume.
What are the closing costs for selling an investment property in Alexandria?
Non-commission seller-side closing costs in Alexandria typically run $1,800–$3,500 on a $650,000 sale. The largest items are the Virginia grantor tax ($1 per $1,000), the NOVA regional congestion tax ($0.15 per $100), settlement/escrow fees, prorated property tax, and the HOA or condo resale package fee. Commission is by far the largest expense — usually 4–5.5% of sale price when listing fee and buyer's agent compensation are combined.
Can I avoid depreciation recapture if I never claimed depreciation on my taxes?
No. The IRS treats depreciation as "allowed or allowable" — meaning recapture is calculated on what you could have claimed, regardless of whether you actually did. If you owned the property as a rental and didn't take depreciation, you can file IRS Form 3115 (Change in Accounting Method) to claim missed depreciation in the current year and reduce the recapture impact. This is worth discussing with your CPA well before listing.
What's the biggest mistake investor sellers make in Alexandria?
The most common mistake is going to market without a tax conversation first. Sellers list, accept an offer, and only then discover they owe $40,000–$80,000 in unplanned tax — far too late to engage a 1031 Qualified Intermediary or restructure the deal. A second common mistake is selling tenant-occupied without running the math on what vacant would net. A third is over-pricing relative to current rental fundamentals when the actual buyer pool is investor-driven.
Does the HOA or condo association affect my sale in Alexandria?
Yes — significantly. The HOA or condo resale disclosure package is required by Virginia law and discloses fees, reserves, special assessments, rules, and pending litigation. Order it 3–4 weeks before listing. Buyers have a 3-day right to rescind after receiving the package. Properties in associations with low reserves, recent or pending special assessments, or rental caps will see a smaller buyer pool — sometimes by a wide margin. Some Alexandria condo buildings limit the number of rented units, which directly affects whether your buyer can keep your tenant in place after closing.
How does the 1.5% listing program compare to a traditional 3% agent?
The Jamil Brothers Realty Group's 1.5% full-service listing program includes professional 4K photography, drone video, 3D tour, full BrightMLS syndication, partner-led negotiation, and all standard marketing — identical service to a traditional 3% listing, at half the listing-side commission. On a $650,000 Alexandria property, that's roughly $9,750 more equity retained. On a $1M property, roughly $15,000 more. Buyer's agent compensation is negotiated separately and is fully transparent up front.
Is the Alexandria market still a seller's market in 2026?
As of early 2026, Alexandria continues to behave as a seller-favorable market for well-priced and well-prepared properties under $1M, with list-to-sale ratios near 99–101% and DOM in the mid-teens according to BrightMLS. Above $1.5M and in tenant-occupied scenarios, market conditions are more balanced. Submarket and condition matter more than headline numbers — a current valuation gives you the real picture for your specific property.
Glossary
1031 Exchange
A Section 1031 like-kind exchange lets you defer capital gains tax and depreciation recapture by reinvesting sale proceeds into another investment property within IRS-mandated deadlines (45-day identification, 180-day close).
Adjusted Cost Basis
Original purchase price plus capital improvements plus acquisition closing costs, minus accumulated depreciation. Your taxable gain is sale price minus selling costs minus adjusted basis.
Depreciation Recapture
A 25% federal tax on cumulative depreciation taken (or allowable) during ownership. Applies even if you never actually claimed the deduction on your returns.
Qualified Intermediary (QI)
An independent third party who holds 1031 exchange proceeds and handles required documentation. Must be engaged before closing — the seller cannot touch the proceeds directly without disqualifying the exchange.
Net Investment Income Tax (NIIT)
A 3.8% federal surtax on investment income including real estate gains. Applies when modified adjusted gross income exceeds $200,000 (single) or $250,000 (married filing jointly).
Capital Improvement
A long-lasting upgrade that increases property value or extends useful life — replacements like HVAC, roof, kitchen, windows. Adds to cost basis. Differs from repairs, which are already deducted in the year incurred.
Boot
In a 1031 exchange, the portion of the trade not reinvested into like-kind property — including cash received or debt relief. Boot is taxable in the year of sale even if the rest of the exchange qualifies for deferral.
Grantor Tax (Virginia)
A state-imposed transfer tax of $1 per $1,000 of sale price paid by the seller (grantor) at closing. NOVA jurisdictions also collect a regional congestion tax of $0.15 per $100 in addition.
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