Selling Your Building When You Retire or Sell the Business

This page is for owners who run a business out of a building they own: a manufacturer, a distributor, a contractor with a shop and yard. When the owner retires, sells the company or closes it, the building has to go somewhere too, and its sale has its own rules and timing. More than half of the owners of U.S. employer businesses who answered the Census Bureau's 2019 Annual Business Survey, 51%, were 55 or older in 2018.

We're part of a family-owned business that has been operating for over 15 years, and we buy owner-occupied industrial buildings across Philadelphia and South Jersey. This page covers the building. The sale of the company itself is a separate deal for you and your own advisors.

What can you do with the building when you retire or sell the business?

An owner who retires or sells the business has four main choices for the building. It can go to the company's buyer or to a separate buyer, or the owner can keep it and lease it to the business. The owner can also sell it and lease it back for a transition. Closing the company instead means selling the building empty or emptying.

Direct Warehouse Buyers buys the building itself, separately from the business. The routes can combine. An owner might sell the building now in a sale-leaseback, with the lease term set in the deal, while the business winds down or looks for a buyer. If the lease allows it, the lease can then pass to whoever buys the company. The written terms decide what's possible, so settle them before you sign.

Should you sell the business or the building first?

There's no single right order for selling a business and its building. A company buyer may want to buy the building, lease it from you or move the business elsewhere, and its answer can shape everything else. A written offer on the building early on gives you a reference point, whichever order you choose. Your accountant and business advisors can weigh the tax side.

The building sale and the business sale can have different buyers, documents and closing steps, and they may not move at the same speed. Three questions can help decide the order:

• Does the company's buyer want the building? If it wants to stay, it may buy or lease. If it plans to move the operation, the building will be empty after the business sale closes.
• Who will occupy the building, and when? A building sold with the business still running in it needs a lease from the start. One sold after the move-out sells vacant.
• What does each sale need from the other? A business buyer's lender may want a lease in place, and a building buyer will want to know whether a tenant is staying.

What if you're closing the business instead of selling it?

Closing the business turns the building into an empty one, with its own costs and rules. In New Jersey, closing a business covered by ISRA triggers the law even if the building isn't sold yet. In Philadelphia, a commercial building vacant more than three months, with no construction under way or scheduled, needs a license and a bond or letter of credit.

Planning the building's sale alongside the wind-down can cut the time you pay to carry it empty. For the building, three steps matter most. Clear out what you don't want to leave, deal with any chemicals, fuel or waste on site, and keep the building insured and secure while it sits. Our page on selling a vacant building covers carrying costs and the vacancy rules, including Philadelphia's Vacant Commercial Property License.

New Jersey's ISRA counts some wind-downs as closing operations. Examples include a shutdown or a cutback of at least 90 percent in the value of output within any five-year period. A temporary stop of more than two years counts, and so does a Chapter 7 bankruptcy. A closing triggers ISRA the same way a sale of the real property does. The notice is due within five days of closing operations or of announcing the decision to close, whichever comes first. Our ISRA guide covers the ISRA triggers.

New Jersey rules for an owner-user's sale

In New Jersey, the seller pays the Realty Transfer Fee, and the state must receive the buyer's bulk sale notice at least 10 business days before closing. If the business in the building is covered by the Industrial Site Recovery Act, the sale triggers ISRA. The owner or operator then has five days after signing the sale agreement to notify the state.

Whether ISRA applies depends on the business operating in the building. A business is covered when all three of these are true, subject to the rule's listed exceptions:

• Its NAICS code, the federal code for its type of business, is on the rule's list
• It operated in New Jersey on or after December 31, 1983
• Its operations involved generating, manufacturing, refining, transporting, treating, storing, handling or disposing of hazardous substances or wastes

If yours might qualify, start with your environmental professional, because New Jersey's Department of Environmental Protection (NJDEP) stopped issuing applicability determinations in 2008.

If the company's equipment, inventory or other business assets are sold too, that sale can need a bulk sale notice of its own. New Jersey's rule covers business assets sold outside the ordinary course of business, in whole or in part, and the purchaser files it.

Owners who've retired to another state should know about one more payment. An individual, estate or trust that isn't a New Jersey resident makes an estimated income tax payment at or before closing unless an exemption on the state's residency form applies. The FAQ explains how New Jersey figures that payment, and the cost guide covers New Jersey's transfer fees.

Does Pennsylvania's bulk sale clearance apply when a business sells its building?

Pennsylvania's bulk sale clearance can apply when a company sells its building. The law reaches a company selling 51% or more of its goods, fixtures, equipment, buildings or real estate. It calls for 10 days' notice to the Department of Revenue before the transfer, and the purchaser must get a clearance certificate from the seller.

The Department of Revenue says the law applies when taxpayers transfer more than 51 percent of assets, including real property. The Fiscal Code, as the Commonwealth Court quoted it in 2024, puts the line at 51% or more and lists buildings and real estate among the assets.

The certificate shows that the seller's state tax reports are filed and its state taxes paid through the date of the transfer. A purchaser who doesn't get one can be held liable for the seller's unpaid state taxes, which is why buyers ask for it. The application is the Department's Form REV-181. The Department of Labor & Industry asks for its own written ten-day notice of a sale of 51% or more of an entity's assets, for unemployment compensation taxes. Whether either rule reaches your sale depends on who the seller is and what it's selling, so ask your accountant or the Department.

Other Pennsylvania rules for the sale

Any building sale in Pennsylvania carries the 1% state realty transfer tax plus any local tax, and Philadelphia's total is 4.578%. Every Philadelphia sale needs a Property Sales Certification, and some suburban towns require a resale inspection.

Our cost guide lists Pennsylvania transfer tax rates by county and town. For a building in Philadelphia, see what Philadelphia requires before a sale, including the city's vacancy rules. Suburban towns' resale rules are on the Bucks County, Montgomery County and Delaware County pages.

Equipment, racking and inventory

A building sale covers the real estate, and the sale agreement decides which equipment goes with it. Machinery, racking, cranes and compressors can stay or go. Some owners sell equipment with the business, some auction it, and some leave pieces in place because removing them would cost more than they're worth.

Tell us early what you'd like to leave, take or sell, so the offer can say what's included. Equipment that's bolted down, wired in or plumbed, such as a crane rail or a process line, can take time and money to remove. Settle the plan for it before closing. Our page on selling a manufacturing plant covers machinery and the transfer taxes.

Taxes when you sell at retirement

How the sale is taxed depends on who owns the building. Some owner-users hold the real estate in a separate company that leases it to the operating business, and whichever entity holds title is the seller. For individuals, the IRS taxes any unrecaptured section 1250 gain from selling real property like a building at a maximum 25% rate. Your accountant can tell you how much of your gain that is.

Your accountant can tell you how the sale fits with the rest of your exit, including the timing across tax years. If you're weighing a 1031 exchange, our page on 1031 timing sets out the IRS deadlines. Our seller's guide covers the federal, Pennsylvania and New Jersey taxes on a building sale in more detail.

What to have ready

• The deed, and the name of the company or person that holds title
• A recent tax bill and any survey or site plan
• Any lease between the property owner and the operating business
• A list of the equipment and fixtures you plan to leave, take or sell
• Environmental reports, tank records and any letters from NJDEP or Pennsylvania's Department of Environmental Protection
• Your target dates for the business sale or wind-down

Selling the building to us

Send the address and tell us where the business sale or wind-down stands. We'll walk the building with you and send a written as-is offer that you can plan the rest of your exit around. We charge no commission and no fees, and proof of funds is available on request.

If the business is still running, you may not want employees, customers or competitors to hear about the sale early. There's no sign, no listing and no marketing when you sell to us, and we schedule visits with you. If you'd like a nondisclosure agreement before you share financials or leases, we'll sign one.

We can't promise a set number of days. When you sell to us, you choose the date, within the required steps and the due diligence period in our offer. If the business needs to stay for a while after closing, we can talk about a lease written into the deal. How It Works walks through each step. Related situations: environmental problems and an inherited building.