3 Tips for Buying or Selling a Home

If you’re thinking about buying or selling your home, you probably have some questions. The process can be long and stressful, and many of the rules have changed over the past couple of decades. So whether you’re a buyer or a seller, or both, it’s important to be smart.

Here are a few things to know about buying and selling a home.

1. You might get a huge tax break for selling.

Imagine making $250,000 and not having to pay taxes on it! This is the generous tax break that homeowners could be entitled to when they sell their primary residence. And couples may be able to shelter up to $500,000 of gain! As long as you’ve lived in the home for at least two of the five years immediately preceding the sale, this tax break can be all yours. You don’t even have to roll the gain into a new property – the money is yours. And don’t forget about any improvements you made to the home over the years. Those expenses can add to your home’s cost basis, potentially giving you an even bigger tax break. IRS publication 523 gives you examples of improvements that increase your basis.

2. Consider using a real estate agent.

Look, we get it… there are people out there who hate paying a commission, which for realtors can be around 5% to 6%. But sometimes, a good real estate agent can make up for those costs by getting you more money for your home if you’re selling, or maybe negotiating a better price if you’re buying. Even better, they can also acts as buffers against “lookie-loos” to help you find who the serious buyers are, they can give you guidance on price, they have access to the multiple listing service, and they can handle the huge volume of paperwork that’s involved in buying and selling a home. In the end, a good real estate agents could be well worth it.

3. Remember that interest rates won’t be low forever.

The rate for a 30-year mortgage is currently right around 4.5%, but it’s slowly rising. But even if you do wind up paying slightly higher rates than a year or two ago, if you’re able to deduct the loan interest on your tax return, your after-tax borrowing costs may still be below 4%. And think about this: 30 years ago, the 30-year mortgage rates were at 10.46%, according to sources. Even in the mid-90s, rates were close to 8%. So a mortgage loan rate in the mid-4% range is still really low by historical standards.

Either way, whether you’re buying or selling real estate, knowledge is power. By making just a few smart decisions, you may find yourself getting a much better deal in the end.

Information presented should not be considered specific tax, legal, or investment advice. You should always seek counsel of the appropriate advisor prior to making any investment decision. All investments are subject to risk including the loss of principal. This material was gathered from sources believed to be reliable, however, its accuracy cannot be guaranteed.

No client or prospective client should assume that the information contained herein (or any component thereof) serves as the receipt of, or a substitute for, personalized advice from Lucia Capital Group, its investment adviser representatives, affiliates or any other investment professional.

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