Increasingly, the prospect of higher capital gains taxes is cropping up in conversations with investors pondering a looming quandary: To sell or not to sell.

Some brokers are broaching the prospect of rising taxes to prod investors to sell apartment complexes, shopping centers and office buildings and other property in a sluggish investment market. Meanwhile, investors are coming to the table with cash-out tax savings in mind.

"It's being considered by everybody," said Greg Sanchez, president of Durham brokerage Tri Properties. "Under a new president, things could change, and higher capital gains would greatly affect people."

Long-term capital gains taxes are paid on profits from stocks, property and other investments that are sold after being held for more than a year. The current rate of 15 percent is the lowest in 67 years. It dropped from 20 percent in 2003, helping to spark a frenzy of property investment in recent years.

The low capital gains tax rate is scheduled to expire in 2010 under a new president. Democratic candidate Barack Obama wants to raise the rate as high as 28 percent. Republican rival John McCain wants to maintain the low rate, but he may not have congressional support to keep it from reverting to 20 percent.

"If it comes in at the higher end of that range, there's no question that sellers of commercial property are going to take a hit when it's time to pay the tax," said Dan Fasulo, managing director at Real Capital Analytics, a New York commercial real estate research firm.

That may coax some owners, particularly those hoping to hatch a nest egg, off the sidelines. "For your mom or pop who has owned an apartment complex for 30 years and just wants to spend the money and sail off into the sunset, it's certainly something that's part of the consideration," Fasulo said.

For now, much of the talk about capital gains taxes is just that.

A lot can happen before November, not to mention 2010, when the 15 percent rate expires. Several Triangle brokers said they are working with clients who are weighing sales motivated in part by capital gains. None, however, could point to one that had acted because of taxes alone.

"There's nothing they can do about it until they know what will happen" with the election, said Mark Howe, a Coldwell Banker Commercial Trademark Properties broker in Raleigh. "Even then, they don't know what will happen."

How lending figures in

A big consideration is how the lending environment will affect prices of commercial real estate.

In recent years, low taxes encouraged property sellers to cash out as a booming economy and lax lending encouraged investors to buy bricks and mortar.

As the economy has slowed, risk-conscious lenders have made it harder for highly leveraged investors to come to the table. Their absence has softened property prices. Now owners, reluctant to sell until prices turn around, are playing a guessing game.

"Nobody can tell you in a year's time or two years' time what the value of properties is going to be," said Jim McMillan, a broker at Grubb & Ellis/Thomas Linderman Graham in Raleigh.

The unpredictability poses a dilemma: "Do you take your medicine now and do it at a loss in a better capital gains environment? Or do you wait for the market to come back and get a higher sale price, but pay more taxes?" said David Finger, managing principal of Raleigh brokerage Colliers Pinkard.

Consider this scenario: In 2001, an investor pays $6.37 million for an office building in Wake County, where average commercial property values have since increased 57 percent. Feeling pretty good, the investor decides to sell today for $10 million, enjoying that average appreciation. After paying 15 percent in capital gains taxes, the seller pockets $3.09 million.

But if the capital gains rate rises to 28 percent -- and if property values fall 15 percent, as several analysts have predicted -- the seller of that same property could sell for $8.5 million, taking home $1.5 million after taxes.

"If you're a bookie, you have to give odds to capital gains taxes going up," said Scott Busch, a Sperry Van Ness broker in Raleigh. "If you sell now and pay your taxes, you can take advantage of another opportunity if the market decreases."

Many brokers, however, caution against tax-motivated selling.

"If a decision to sell or buy a property is based on tax planning exclusively, it's going to be a bad decision," said Jim Scofield, a Sperry Van Ness broker in Raleigh. "You invest in a piece of property for a return it's going to generate to you during the ownership."

If you have to sell, you're better off selling now than risking further price declines in 18 months, Scofield said.

"If you can hold on for the next five years," he said, "then hold on. Real estate cycles repeat themselves, and we happen to be on the back side of the curve."

Tax benefits should be the last consideration, Scofield said.

"The first thing is just the fundamentals -- the location of the property, the condition of the property, the economic return that it's going to generate," he said. "If on top of that you have a tax benefit, that's the icing on the cake."

Get $150+ in coupons in every Sunday N&O. Click here for convenient home delivery.