Home ownership is a long-term investment, but sometimes circumstances change and it becomes necessary for a homeowner to sell their property sooner than they expected. While it isn’t an ideal situation, it is possible to sell your house after 1 year or less.
In most circumstances, it takes about two years of mortgage payments to cover most of the up-front costs associated with buying a home. If you sell earlier, it is possible that you may lose money on the sale. Evaluating your obligations is the best first step in choosing your best option.
Find Out Your Mortgage Payoff
Once you decide you’d like to sell your home after 1 year, check in with your mortgage servicer to find out exactly how much you owe and ask if there are any financial penalties for paying your loan off early. Knowing the payoff amount and stipulations on your loan can help you make an informed decision on how to move forward. Depending on your financial situation, there may be different options on how to sell your house after 1 year.
Have Your Home Appraised
After you know your loan payoff amount and any stipulations, the next step is to find out the current value of your home by scheduling a real estate appraisal. A professional appraiser will be able to inspect your home and calculate its value using market trends and comparable properties.
Estimate Selling Costs
Once you know your home’s value, you can then deduct the amount you owe on your mortgage to get an approximate idea of how much you could make or lose on the sale. Keep in mind that there are costs associated with selling a home.
If you use a real estate agent to sell your home, you’ll pay a commission based on the sale price of the house. You will also have to pay about 10% of the price for closing costs on the transaction.
Calculate Your Capital Gains Tax
If your estimates show that you will still make a profit on the sale after paying agent fees and closing costs, you may have to pay capital gains tax on that money. The exact amount of the tax depends on how long you owned the home, your income, filing status, any exemptions, and other factors.
If you sell your house less than a year from when you purchased it, you will be liable for short-term capital gains taxes on the profit. Since short-term capital gains are taxed the same as regular income, you’ll owe taxes at the same federal rate as your regular earnings and wages.
If you sell your house after 1 year, your tax obligation becomes long-term capital gains and the rate could be reduced by half. Waiting two years could eliminate capital gains tax completely.
Capital Gains Exclusions
It is important to note that you may qualify for a tax liability exclusion. In some circumstances, the government may exempt you from capital gains tax. If you must sell your home because of job-related relocation, job loss, divorce, or other unforeseeable events, a real estate tax professional can help you obtain an exemption.
Sell Your House After 1 Year for Cash
If you are in a situation where you need to sell your home after one year, you will want to simplify the listing and selling process as much as possible to minimize additional time and cost. Rather than listing with a traditional real estate agent, there are other options to sell your home faster.
Selling your home for cash can be the quickest and least expensive way to get out of your home. On top of agent commissions, listing your home for sale means you’ll likely be investing time and money in preparing your home for showings. Plus, you’ll likely have to pay for any necessary repairs that show up on a home inspection prior to the sale.
When you sell your home for cash, the process can be much more simple. The offer is based on the condition of your home, and you won’t need to invest in repairs or showing the home. The time between offer and closing can also be greatly reduced, and if you are in a difficult situation, every day can make a difference.
Sell to Quick Fix Real Estate for Cash
If you need to sell your house after 1 year, we would love to buy it from you and we’ll pay you cash. Schedule your free, no-obligation home inspection and get your cash offer from Quick Fix Real Estate today.