Disposition in real estate refers to the act of selling, transferring, or otherwise disposing of a property or an ownership interest in a property. It covers any transaction that changes who holds title or creates, modifies, or terminates rights in real property. Disposition can be voluntary (for example, a sale or gift) or involuntary (for example, foreclosure or expropriation).
| Application | Description & example |
|---|---|
| Traditional sale | Owner sells property to a buyer (cash or financed). Example: listing a house with a broker and closing with a buyer. |
| Gifting or transfer | Ownership moves without purchase—often part of estate planning. Example: transferring a family home to a child; may require reporting for tax purposes. |
| Foreclosure or expropriation | Involuntary disposition through lender enforcement or government seizure. Example: a mortgage lender forecloses after missed payments. |
| Real estate wholesaling | Investor assigns or flips a purchase contract to another buyer for a fee without taking full ownership. Example: selling a contract to buy a fixer-upper to another investor. |
| Seller financing | Seller acts as lender and receives installment payments while transferring title or contractual rights. Example: owner sells a property and accepts monthly payments instead of a lump sum. |
| 1031 exchange | Investment property sellers may defer capital gains tax by reinvesting proceeds into a like-kind property under tax code rules. Example: selling a rental building and buying another to defer tax. |
| Estate asset disposition | Executors or personal representatives sell estate property to distribute assets to heirs. Example: executor lists and sells inherited real estate to divide proceeds among beneficiaries. |
Most dispositions trigger tax reporting. Selling an appreciated property typically creates a capital gain, which may be taxable unless deferred (for example, through certain exchanges) or exempted by specific rules. Different countries and tax authorities (for example, the IRS in the U.S. or CRA in Canada) have distinct rules on basis, allowable deductions, exemptions and timelines.
In short, disposition in real estate means any act that disposes of property or property interests—selling, gifting, transferring, or losing ownership through legal action. It’s a broad concept with significant legal and tax implications, so owners and investors should plan dispositions carefully, follow jurisdictional registration rules, and consult professionals when needed.
