In this short, Shafiq Hirani, MBA, CCIM, walks building owners through a concrete side‑by‑side analysis of whether to refinance an income‑producing property or sell it outright. Using a $4.23 M building with $2.4 M existing debt as a case study, he shows that a refinance could support a $2.72 M loan, allowing the owner to cash out roughly $317 K tax‑free while still retaining the property’s $275,200 annual income and future appreciation. By contrast, a sale would generate about $1.06 M after 6 % selling costs, debt payoff, and an estimated $500 K tax bill (including capital gains, NIIT, state tax, and depreciation recapture). Hirani emphasizes that the refinance keeps the asset and cash flow alive, whereas the sale provides a lump sum but ends future income and appreciation. He advises owners to treat the choice as a strategic decision, not a reaction, and recommends consulting a CPA for precise tax calculations. The video ends with a brief call to like and subscribe.
Chapters
If you are sitting on a building with real equity and you have been going back and forth on whether to refinance it or just sell it and be done, I have a solution. Let me show you the comparison side by side because most owners have never actually run it. I'm Shafiq Hirani, MBA, CCIM. I have helped owners do both. Sometimes selling is genuinely the right call, but it should be a decision, not a reaction to being tired. Like and subscribe if this helps. Let's look at the numbers. Our building is worth about $4.23 million on the lender's income. You owe $2.4 million. If you refinance, the coverage test supports a loan of about $2.72 million. After paying off the existing debt, you take out roughly $317,000. Now here is the part that matters and most owners underweight it. That $317,000 is not taxable. Borrowed money is not income. You did not sell anything, so there is no gain to report. And critically, you still own the building. You still collect the $275,200 of income. You still hold whatever appreciation comes next. Now the sale. Same building. $4.23 million. Take off selling costs, call it 6%. So roughly $254,000. Pay off the $2.4 million of debt. And then you owe tax on the gain. That tax number is where owners get surprised. There is federal capital gains, there is likely net investment income tax, there may be state tax, and there is depreciation recapture, which for a building you have held a long time can be the single largest piece of the bill. Say the following line as written. It protects you, and it is true. I am not going to give you a precise tax figure because it depends entirely on your basis, your holding period, and how much depreciation you have taken. That is a conversation for your CPA. But on a building like this, a total tax bill in the range of $500,000 would not be unusual. Run those numbers and you net somewhere around $1.06 million. So, So on the surface, selling wins. $1 million versus $300,000. But look at what is on the other side of the ledger. When you refinance, you keep an asset worth $4.23 million that produces $275,200 a year, and you took out $317,000 tax-free. When you sell, you have $1.06 million, and you own nothing. The income stops, the appreciation stops, and you now have $1 million that— so here is how I would think about it.
