Is it time to sell your home? Most homes aren’t “forever homes,” and the majority of people do sell their home at some point. According the National Association of Realtors, the average homeowner lives in their home for 10 years. But what if you want to sell your home sooner? How soon is too soon?
Of course, when you sell your home is up to you and dependent on many factors. For example, if you have a great new job offer in a faraway city, you may have no choice but to sell your home, even if you’ve lived there for less than a year. But not all reasons to move are that extreme. And the longer you stay in your home, the better, because selling your home too soon can be costly.
Most experts agree that you should stay in your home at least five years before selling it and buying a new one. Why? Because that’s the amount of time it usually takes the average homeowner to recoup many of the initial fees they paid when buying the home, as well as the yearly mortgage costs. You also need to account for the new fees you’ll incur when selling the home, such as real estate commissions and closing costs.
Additionally, if you sell your home too soon, you may have to pay capital gains tax. To avoid capital gains tax, the home you are selling must be your primary residence that you personally live in for a minimum of two of the five years prior to the sale. If you meet this criterion, you can exclude $250,000 ($500,000 for married couples) of your sale’s profit from capital gains tax.
Ultimately, whether you sell your home or stay in it long-term is a very personal decision. Know the facts, and then do what’s best for your unique situation.
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