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Just last week, our office received a call from one of our clients who had a “quick question” about selling the air rights attached to their investment rental property. The answer?

👉 Yes, we can calculate basis and estimate the tax bite 💸.

But let’s be real for a second—this is the classic “putting a Band-Aid on a bullet hole” scenario. 🩹💥

The real question—and the meaningful discussion that followed—centered around the big picture:

“What are your short-term and long-term financial goals, and how can we leverage this opportunity to meet them?” 📊📈

These so-called “quick questions” are actually perfect jumping-off points for deeper planning. 🚀 But if we try to answer them off the cuff, we risk missing a much bigger opportunity (and possibly costing you more in taxes later!).

🧠 So What Are Air Rights, Anyway?

Air rights refer to the space above your property—yes, really! If you own a building in a dense or developing area, that airspace might be valuable to a neighbor, developer, or commercial entity looking to expand up instead of out. ⬆️🏙️

💰 What Happens if You Sell Your Air Rights?

Here’s what we typically walk through with our clients:

• 📑 Determine your basis in the air rights—this may be tricky and depends on how your property was originally acquired.
• 🧮 Calculate capital gain on the sale (difference between what you receive and your basis).
• 📆 Determine short-term vs. long-term capital gain—this depends on how long you’ve owned the property and whether air rights are treated as a separate asset.
• 📚 Review how this fits into your overall tax and financial plan—because one sale can ripple into multiple areas of your tax world!
• 🧗‍♂️ Explore reinvestment strategies—can we 1031 exchange air rights? Maybe. Can we offset gains? Possibly.
• 🧾 Understand reporting obligations—this is not a handshake deal; you need a paper trail and a good accountant (hello! 👋) to walk you through the steps.

🧭 Let’s Talk Strategy

Instead of asking, “Can I sell this?” let’s ask:

• 🧐 Why are you considering selling now?
• 🏡 Do you want to reinvest in more real estate or a different asset class?
• 📉 Could this sale affect your depreciation schedule, rental income, or future estate plan?
• 🤹‍♀️ Are there multiple owners or partners to consider?
• 🗺️ How does this sale fit into your 5-, 10-, or even 20-year plan?

💬 Final Thoughts

So keep the “quick questions” coming—and let’s keep the big discussions going until we’re sure we’ve crafted the best solution for your goals. 🤓💬💼

Selling air rights might seem like an “easy win,” but handled wisely, it can be so much more than that. And that’s what we’re here for…👉 Proactive planning > reactive answers. Always.

Seems like this is another call to action, no wishful thinking, let’s not say “I wish I had…”,  and as always

Feel free to search our website for some of our complementary resources or get in touch:  Contact us if you have tax concerns, tax minimization questions or want to discuss the next steps for your business success and financial goals.  Use our search box for those posts specific to tax minimization, business planning, business best practices, casualty losses, etc. and see what “pop’s” up.