Twin Cities Real Estate News

If you want to take advantage of the affordability of homes today, but anticipate major life changes in the next couple of years, 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 for more than you owe on the mortgage, you'll be fine.  Otherwise, you'll lose those costs associated with your initial investment, including the money you spent on loan and closing fees.

Also consider the cost of selling your home soon after purchasing.  You paid closing costs when you bought it, but you face more closing costs when you sell it.  In just a couple of years, most people won't build up enough equity in the home to justify selling so soon and paying transaction fees 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 from those taxes up to $250,000 (or up to $500,000 for married filers) - but the home must be your primary residence and lived in for at least two years.

Hardships like health issues or job relocation may allow you a partial exclusion on those taxes, though.  Speak with your tax advisor and real estate agent for some solid advice.