If you want to take advantage of the affordability of homes today, but anticipate major life changes in the next year, you have to consider the implications of selling so soon. Keep the following factors in mind when making your decision.
As long as you sell and pay off the mortgage and associated selling costs, you’ll be fine. Otherwise, you’ll lose those costs associated with your initial investment, including the money you spent on loan and closing costs.
Also consider the cost of selling your home so soon after purchasing. You paid closing costs when your bought it, and you’ll pay closing costs when you sell it. Over just a couple of years, most people won’t build up enough equity in the home to justify selling so soon and paying the transaction costs again.
Finally, if you sell your home in less than two years — for a profit — you may have to pay capital gains taxes on that profit. Currently, homeowners are exempt form those taxes up to $250,000 for a single person and up to $500,000 for couples — but the home must be your primary residence and you have to have lived in it for at least two years.
Hardships like health issues or job relocation may allow you a partial exclusion on those taxes, though. Be sure to consult your tax advisor for information on your specific situation.
Contact the Kathy Henne Team RE/MAX FINEST by calling (937) 778-3961.