One of the questions that often come up during a conversation about buying, selling, or refinancing a home. The question is, do I sell my home or not? The answer depends on what it is you want, do you want to just keep your home, and refinance it because the rates are low, or refinance to get cash out of your equity, or sell your home all together especially during this market. The interest rates are super low right now, and most people are refinancing to get that lower rate, and then there are those who are wanting to purchase a home and get that sweet, low rate deal.
Well, there are a few things to consider. If you are choosing to sell your home, you want to first figure out your tax stuff. What I mean by that, is are you going to be paying taxes on your profit/income/gain? this is called “capital gain”
Well, according to the IRS: https://www.irs.gov/taxtopics/tc701, you do not have to pay capital gains on the sale of your home if 1: the profit is $250,000 or less (single), or $500,000 if married; 2: if you have lived in your home for 2 years out of the 5 years that you have owned your home.
So, let’s say, you purchased your home in 2012 for $200,000, and decide to sell your home in 2020 for $300,000, you will not have to pay capital gains if you lived in the home for 2 years, and your profit is less than $250,000. So, if you sell your home for $300,000, your profit is only $100,000.
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