My husband died 5 months ago. His system for the last 20 yrs. was to keep the rental income on our 3 small units low to avoid turnover and just sell the triplex at retirement. I need now to either sell the place or raise the rent. Normally I raise it very little (2%) at the start of each year but it is quite under market and 1 bdrm apartments don't exist here. If I raise it by $100 per unit it will still be under market but closer to correct. Now that the dust has settled somewhat for me I was going to compose a letter and raise the rent 12% ($100) to start June 1st. Can I do that? In January I raised it the usual 2% as I had not figured things out yet.

If the increase in one calendar year is over 10% then you must give 60 days notice on the last increase.

If you and your husband had a family trust and the apartment building was in that trust, you have several advantages to consider.

1) You now have a stepped up basis and can start to re-depreciate the building at today's value. His 50% share. This means you will save on your income tax.

2) If you were to sell, 1/2 of the property would have no Long Term Capital Gains Tax.

a) The Federal rate is 20%

b) California has a 13.3% rate

c) If your income is over $200,000, then you will pay a 3.8% affordable care tax.

Add your sales commission 6%, closing costs 2% -- and you'll see if you sell, the net cash in your pocket isn't so much.

If you have some savings, then don't be too afraid to raise rent. If your tenants moves, you can fix the place up and get more income.

Is the property under rent control? If yes, then you may need to sell rather than raise rent, because you missed your opportunity to raise rent yearly.

If you are not under rent control, then you have only the notice requirement to comply with.

Peggy, I'm sorry for the loss of your husband.

I would have preferred you hadn't so recently raised the rates on the tenants. Tenants don't really expect more than one increase each year.

My regrets for your loss, and I'll try to be helpful.

Without knowing California law, I don't think stepped up basis applies here, unless the rental was in your husband's name only and it passed to your name at his death.

60 days notice for large increases in CA, from what others say.

Most importantly: do you want to be a land lady? How involved were you with the rentals over the years? It takes a special kind of person to deal with tenants. If you are not familiar with the laws--and my guess is you aren't since you were not familiar with a basic topic like rent raises--then it may be best to turn this over to a professional management company or sell according to your original plan. Talk to a CPA and ask about your tax liability if you sold. If you do not receive a stepped up basis, 20 years of depreciation recapture will be taxed at 25%. Fortunately, any capital gains will only be taxed at long-term rates of 15 or 20%, depending on your income.

Found it heart warming that most said sorry for your loss first. Please include me in that condolence to you.

Looks like you got a CA answer.

My condolences to you, your family, and all of your loved ones who knew your husband.

I am really thankful that you followed this thread to help advise you what to do. Depending on where your property is located, it can be rather difficult to find good tenants.

We did raise the rent for everyone at the same time.

Was telling that everyone is equal and we are not picking on you. Every one stayed.

The other idea: blame someone else.

Raise the rent because taxes are higher now.

You was trying to absorb it for a long time, but can’t do any longer.

If they are not happy - they can call the local government. My argument was even parking ticket is higher every year.

Do not raise to the round number.

I’m sorry for your loss, I’m sure having to make these decisions now is much harder than it otherwise would be.

It think it’s important that you look at what other units are renting for and realise just how much your units are below the current market. California is is near the point of enacting some form of statewide rent control and I believe the idea that you will be able to raise the rent $50 every year just wont be possible.

Did you know that last year the governor declared an emergency for most of the state and said that price gouging laws applied to rental housing (no increase over 10% even if the tenant moved out). This emergency was extended for over 6 months.

I predict that the new governor (even more liberal than Moonbeam) will declare a “housing emergency” to start the anti price gouging law again to keep rents down while a statewide rent control bill is being written and passed.

I’m sorry for your loss, I’m sure having to make these decisions now is much harder than it otherwise would be.

It think it’s important that you look at what other units are renting for and realise just how much your units are below the current market. California is is near the point of enacting some form of statewide rent control and I believe the idea that you will be able to raise the rent $50 every year just wont be possible.

Did you know that last year the governor declared an emergency for most of the state and said that price gouging laws applied to rental housing (no increase over 10% even if the tenant moved out). This emergency was extended for over 6 months.

I predict that the new governor (even more liberal than Moonbeam) will declare a “housing emergency” to start the anti price gouging law again to keep rents down while a statewide rent control bill is being written and passed.