Are you prepared for the cost of selling your home?
Here are a a couple of expenses to be prepared for.
Capital gains taxes
If your home has appreciated a lot, you may have to pay capital gains tax. This tax is based on the difference between your home’s purchase and selling prices, minus the value of documented improvements such as an addition (but not maintenance such as a roof replacement). So, if you’re in a hot market and your profits are substantial, Uncle Sam may take a small chunk when April rolls around.
The good news is, this rule comes with substantial exemptions. If you’re selling your primary residence as a married couple filing taxes jointly, you can exclude up to $500,000 of profit from the sale of your home; if you’re single, it’s $250,000. Talk to your accountant or a tax preparer for more information.
Closing costs will likely be your second-biggest expense behind commission fees. You can expect to spend roughly 2% of your home’s sale price.
The buyer typically chooses the closing company, and closing costs tend to be fixed, including transfer taxes, mortgage processing fees, escrow fees, and notary fees. You’ll also pay at closing any outstanding property taxes, a prorated share of the water and sewage bills (depending on when you sell), and the remainder of your mortgage.
Yet you may have control over a few closing costs. If you hire a real estate attorney to oversee your side of the transaction, it’s worth shopping around to compare rates. You might also be able to avoid a $100 to $200 reissue fee for the title search if you can provide a copy of your policy.
Read More at Realtor.com
At Tindall Law Firm, LLC we are very experienced in assisting with real estate transactions and can assist in helping you with your home sale or purchase. Please contact us with any questions on this topic or any other legal issues by calling us at (203) 755-0018 or visiting us online at http://tindall.wpengine.com/ with all your legal needs.