If you’ve recently bought a new house, then you can sell it anytime you want. It’s your house, after all! However, that doesn’t mean you should. Although extenuating circumstances might force you to sell your house soon after buying it, there are several reasons why you should consider waiting a few years if possible.
Why Should I Wait Before I Sell My House?
Real estate tends to be a very stable investment and will typically appreciate over the long term. If you sell quickly after you’ve bought (say, within the year), then odds are you won’t make much of a profit; if any. In fact, it’s more likely you’ll lose money when you take into account all of the costs associated with buying and selling a house as well as moving to and from a new location.
For instance, in addition to the down payment and mortgage payments you’ve already made, you’ve also spent money on moving costs, property taxes, mortgage insurance, and more.
Secondly, even if your house does jump in value significantly, if you sell your house within a year of having bought it, your capital gains will be taxed like regular income. You need to wait at least a year for your capital gains to be taxed as long-term gains and not short-term gains (which will save you money).
How Long Should I Wait Before I Sell My House?
At the very least, you should wait a year to avoid a higher capital gains tax rate. However, considering all the costs associated with buying a house, most homeowners won’t break even when they sell unless they wait at least two years.
For more advice on buying and selling homes, be sure to contact us at Randy Lindsay today.