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Here’s How Long You Should Live In A House Before Selling It
By A.E. FEENSTRA
Many variables can influence how much profit you can turn when selling your new home. Ultimately, your profit depends on how much equity you have in your property, but if you still have a large mortgage to pay off, a lot of your money could go back to the bank.
Whether you have an adjustable-rate mortgage or a fixed loan is important to note when considering selling your house. Fixed-rate mortgages offer a lot more stability and predictability when talking about the future of your home, but adjustable-rates can make it hard to determine the optimal time and price at which to sell your house, due to varying interest rates.
Capital gains tax is essentially the charge levied on your profit; if you’ve had your home for more than a year, it will be classified as a long-term tax rate, but if not, it will be a part of your short-term income tax rate. However, you can avoid these taxes entirely if you’ve lived in your home for two out of the last five years and have it as your primary residence.
Buyer’s markets favor those who are looking for houses, but seller’s markets provide a large demand for homes, creating possible bidding wars between buyers and getting the best price at which to sell your property. Knowing which market you’re in is advantageous when selling your house as you can sell during the most profitable time.
Generally, you should stay in your home at least five years to build equity and gain the maximum amount of profit possible. Closing costs also include real estate and mortgage fees, and are typically between 2% and 5% of your total mortgage — the longer you wait to sell your house, the less these costs are relative to your property’s value.