As home values soar nationwide, many homeowners are considering the potential money to be made by selling their homes. For those who bought a residential property when prices were significantly lower, the potential profit may seem like an exciting reward.
However, before you leap into listing your home and signing a contract, take the time to consider some of the potential downsides to selling your home. If you have concerns like the ones listed below or want to buy a new property, contact Rebeccas Realtor today:
Going from a being a homeowner, to gaining a significant amount of income in a single year from the sale of a house, can cause a nasty tax shock for some people.
To start with, the interest on your mortgage is typically a tax deduction, and that will be lost if you don’t purchase a new home soon after selling the one you now own. Next, depending on how much you make on the sale of your home, and whether you put some, any, or all of that money into buying another one, you may have a very substantial tax bill waiting for you when you file next April.
Don’t make the costly mistake of leaping at the potential money to be made, by selling your house for a lot more than you paid for it, without thinking through the tax issues in advance.
2. Trade Value
You may be thrilled to see that your home value has significantly appreciated in the years since you bought it. It will, potentially, give you a large chunk of equity that should come to you after the sale. But have you considered what you can afford to pay for a new house on today’s market?
Many homeowners are shocked to discover that prices have shot up so much, that the range of homes they pictured moving into may have gone out of their range. While there is almost always some potential market somewhere with the home you want, in a price range you can afford, it makes sense to do some shopping around first.
If prices are so elevated that your home looks really good, compared to what you can afford on the market after you sell, then maybe it makes sense to keep what you’ve got.
Again, it is tempting to see the home you own as a source of profit that could be yours when you sell. But your home is more than just a price on the market, of course. It is memories and improvements you’ve put into the place; it is neighbors and a community that you’ve come to know.
Be certain that the next place you are thinking of moving to is what you expect it to be. It’ll be too late to go back once you buy your new house, and start hating the new neighborhood.
Take A Moment To Really Think Things Over
Like any major decision, selling your house can have some serious downsides. Think through your options carefully. Consult with a realtor on the serious financial, tax, and life changes that you may be in for, if you decide to sell your house. Don’t rush into something you may regret soon after.