You may be wondering if there are tax deductions when selling a home. And the answer is: You bet!
Sure, you may remember 2018's new tax code—aka the Tax Cuts and Jobs Act—changed some rules for homeowners. But rest assured that if you sold your home last year (or are planning to in the future), your tax deductions when you file with the IRS can still amount to sizable savings.
Want a full rundown of all the deductions (as well as tax exemptions or other write-offs) at a home seller's disposal? Check out this list to make sure you miss none of them.
1. Selling costsRead More
In the real estate business, you need to take steps to make your home stand out from those around you. Here are some thoughts on perks that get buyers interested.
Perks That Get Buyers To Make Offers
From the perspective of the average buyer, hunting for that perfect home is both exciting and excruciating. Even with the advent of real estate sites on the Internet, buyers spend an inordinate amount of time looking at homes that simply do not fit their vision. Once they find a good area, they face the task of deciding between homes. In our modern society, developments tend to have one, two or maybe three styles of homes. These styles are repeated over and over with the only real difference possibly being landscaping.
In such a situation, you need some advantage over comparable homes in the area. There is a reason they are called “comps”, and it can be difficult for buyers to make a decision. Given similar homes and prices, they may decide on the interior décor even though it will go with the seller! To make your home stand out just a bit, which could be critical, consider offering the following perks when possible.
Overall, you want to offer flexibility. If you are upfront with it, buyers tend to view you in a better light. Offer to go with a fast or slow-closing depending on their particular needs. If they have not lined up financing, offer to put them in touch with your mortgage representative. Heck, offer to let them store stuff in the garage while closing occurs since they are probably stressed about moving at the same time as wrapping up the purchase.
An area where you can really stand out from the crowd is an allowance. A buyer is committing to a large amount of debt to purchase your home. Inevitably, they will nitpick over various aspects they are not crazy about. Instead of fighting with them, offer them a cash allowance at the end of closing that can be used to fix whatever is bugging them. Obviously, you need to be careful about how much you offer them, but it can be the difference between getting an offer or not.
When selling your home, try to be flexible wherever you can. If you offer a few perks, your property will stand out from the others around you.
Imagine this: It’s been a few weeks since you first put out an advertisement on your house. You’ve already entertained so many potential buyers; however, no one has yet signified interest to buy your home. Then, just when you least expect it, you receive word from an agent that their client likes your home and is planning to buy it. Unfortunately, there is a catch: apparently this buyer is part of a chain, and before he can place a deposit on your home, he has to sell his own property first. If you’re faced with a situation such as this, what would you do?
There are several courses of action you, as a home seller, can take. However, to protect your interest, it would be advisable to gently advise the buyer that you cannot put your property on hold until he has sold his house. Reassure him, however, that in case your home is still on the market by the time his unit has been sold, nothing would prevent you from transacting business with him.
Most buyers would be willing to present you with contingent offers but it may work to your disadvantage. Once you accept a contingent offer, you will have to advise your agent (or the real estate agents of other buyers) about this. Buyers or agents who are aware that someone else has “laid claim” to the property may have second thoughts about even considering your home. You may not get back up offers from other potential buyers as they will think that your home has already been “reserved”.
In addition, buyers who can afford to purchase a home outright would not want to wait until the 1st buyer reneges on the contingent offer. They would rather spend the time wasted waiting for the reply, looking for other available homes.
If, however, you decide to accept the contingent offer, do not remove your house off the market. Remember that you are unsure of the buyer’s capability to make good on his promise. You just have to inform your potential buyers of your outstanding agreement. If the buyer you are talking to is serious about purchasing your home, this pending contract will not deter him from making an offer.
Buying a property can throw your emotions all over the place. First, you are ecstatic when the seller agrees to your offer. Soon thereafter, you start worrying about the price, potential problems, and the commitment you have made to pay hundreds of thousands of dollars over the next 10, 15 or 30 years. It can be a monstrous rollercoaster for your emotions. You need not have a buyer’s remorse.
The first issue giving rise to remorse is almost always the purchase price. If it makes you feel any better, the seller almost always thinks they should have asked for more. In truth, the agreed-upon price is almost always pretty fair if you obtain a mortgage loan. The lender is not going to give you a loan well in excess of the value of the home, so you can rest assured you probably got a fair price. Yes, you may have paid $10,000 too much, but it is a relatively insignificant amount given the value of the property over time.
The second area of remorse is the payment obligation. Buying a home sounds great until you realize payments of $1,500 or $2,000 are due each month. What if you lose your job? What if someone gets sick? What if, what if, what if… Stop worrying. Life is full of risks and buying a home is a relatively minor one compared to other decisions we have to make. If you default on a mortgage, so what? Yes, it is bad, but they are not going to put you in jail. Most successful business people fall on their faces five or ten times before hitting it big. In a worst-case scenario, you can do the same.
Remorse can be an all-encompassing thing. If you let it take hold of your emotions, you are going to suffer for no reason whatsoever. Remember, real estate is an excellent long term investment. If you keep the property in decent shape and hold on to the property for five or ten years, you will inevitably come out ahead. Stop stressing out and enjoy your new home!
Buying a home is part of the American dream - and for millions of Americans, that dream becomes a reality every year. Unfortunately, for every dream that comes true, there are those that silently fade out. Homebuyers, especially those buying their first house, can make a lot of mistakes in the process if they aren't careful or don't have a good resource (such as a knowledgeable friend) to go to for advice.
First, they buy a home they simply cannot afford or do not need. Have you heard the term McMansions being used? It refers to all the huge houses that seem to pop up everywhere nowadays. Just how many square feet does a family need? All too often new homeowners, and even seasoned veterans, can fall into the trap of buying way more house than they will ever need.
Second, homebuyers fail to lock in their interest rates when buying a home. Interest rates change on an almost daily basis it seems. Some home buyers like to "test the waters" and see how long they can go before locking in a rate - it works sometimes, but it can bite you if the interest rates suddenly jump. Shop around for the best deal on a mortgage, and when you find one you won't ask them to pre-lock the interest rate in. They can usually do this for a period of 7-14 days - which doesn't give you much time, but hopefully, you will already know which house you want to pursue and can start the paperwork soon afterward.
Third, a lot of new home buyers don't understand the complicated mortgage process and all the terms and rules of the loan. You are getting ready to sign off on one of the biggest purchases you will probably ever make - do you realize what you are signing? Have an attorney, or realtor go over the mortgage paperwork with you. Ask lots of questions of your mortgage lender about the loan. Don't be afraid to shop around and check different lenders out to see who can give you the best deal.
Most importantly, realize that you are signing a long-term commitment with serious financial complications if you don't hold up your end of the bargain!
Finally, many homeowners both old and new don't truly understand all the insurance options available to them.
How many of you reading this believe that your house is covered if a torrential rainfall hits and you get flooded? Unless you've purchased Federal flood insurance then you are out of luck - our homeowner's insurance doesn't cover floods! You shopped around for a mortgage, but did you shop around for homeowners insurance?
Do you understand your policy limits and deductible? Are you covered for a place to stay if a fire strikes your house? All these questions should be asked of your insurance agent before you buy a house. Make sure that you are covered for the unknown before you set foot in your new house.
Buying a new home can be a fun, exhilarating process. Nothing in the world can quite beat the feeling of owning your own home. Take a few minutes to understand the responsibilities of owning a home and you will be better prepared to have your own piece of the American dream.
Here are few purchases in life that carry the financial and psychological weight of buying a home. Whether you are buying your first home, moving up to your dream home, or downsizing your home and your life after the kids have gone, it is important to understand the ground rules for success in the world of buying a home.
Making the wrong decision in buying a home can have devastating and long-lasting effects while making a wise decision in home buying can greatly enhance the overall value of the investment. It is necessary to learn all you can about the world of home buying and mortgages before setting out to purchase the home of your dreams.
While there are plenty of web sites designed to help the first time homeowners learn all they can, most financial experts say that there is no substitute for the good old one-on-one learning. Fortunately, most mortgage lenders, home inspectors, and real estate agents will be able to provide this kind of one-on-one learning.
When buying a home it is often best to use a systematic approach as this is often the best way to be sure that all decisions are based on information and reason, not on impulse or emotion. Buying a home can be an emotional process, nevertheless, it is imperative to keep your emotions under control and not let them cloud your judgment.
There are five basic ground rules when it comes to buying a home and shopping smart, and they are:
1. Get your financing before you get your home
There are few things in life as disappointing as losing out on the home of your dreams due to not being able to secure funding. While the desire to get out there is search for that great home is understandable, it is vital to line up the financing you will need before you start shopping for a home.
Getting the financing ahead of time has a number of important advantages, including knowing how much you can buy and gaining more respect from the listing agents. By knowing how much home you can afford before you shop you will avoid wasting your time looking at unaffordable properties, and the listing agent will be more than willing to show you the homes in your price range.
It is also important to take a good look at the various types of mortgage on the market before getting started in the home buying process. These days, mortgages come in far more choices than the typical 15 or 30 years. For that reason, potential home buyers need to understand how each type of mortgage works, and to gauge which mortgage is the best choice for their needs.
2. Look at the community, not just the home
It is a good idea to look at the entire community, instead of focusing on a single home. This can be a particularly important thing to consider for those moving to a new metropolitan area, as these buyers will be unfamiliar with the local climate and lifestyle. It is crucial to determine the areas of town that are most desirable and to consider things like distance from work and local shopping opportunities.
We have all heard that location is the key consideration when it comes to real estate, and that is certainly the case. Buying a house in the wrong area can be a big mistake, and it is important to choose the location as well as the home. Potential buyers can learn a great deal about the nature of the various neighborhoods simply by driving around town, as well as by talking to other residents.
3. Be fair with your first offer
Trying to lowball a seller on the first offer can backfire, as can paying too much. It is important to carefully evaluate the local market and to compare the asking price of the home with what similar houses in the neighborhood have sold for.
Comparing the sales of comparable homes, what are known as "comps" in the industry, is one of the best ways to determine what is fair, and to make sure that you neither overpay or underbid on the property.
4. Always get a home inspection
Always investigate the home for any possible defects before making an offer. Compared to the cost of the average home, the price of a quality home inspection is virtually negligible. Hence, get a good home inspection done before you buy it.
To find the best home inspector, it is a good idea to seek out word of mouth referrals as many of the best home inspectors rely on word of mouth advertising.
5. Do not alienate the sellers of the home
Many real estate deals have fallen apart due to the personal animosity of the buyer and the seller. It is important to avoid alienating the seller of the home during the process and to avoid nitpicking every little detail during the sale.
Keeping the goodwill of the seller will help the transaction go smoothly, and it will provide the best environment for sellers and buyers alike.
Are you still renting a home or apartment for yourself or your family?
If so, you're losing money. Think about these three ways you lose money by renting:
1. You're paying for someone else's mortgage payment. You're missing out on the appreciation that the property gives to the landlord. Appreciation is a term used in accounting relating to the increase in the value of an asset, which means in real estate terms, added value to the property. Over the past five years, houses appreciated significantly, making many new real estate investor multimillionaires.
2. Renters don't get to freeze their monthly housing expenses as home buyers can. Of course, many home buyers get mortgage payments with adjustable interest rates and their payments go up over time. However, these payments will not go up over the long term like rising rents. Just think about how much an apartment costs today compared to ten years ago. A two-bedroom apartment in Rancho Cucamonga, California leases for $2,000 today. The exact same apartment rented for $525 in 1996 when it was brand new. Homebuyers who had low monthly payments in 1996, who did not refinance their mortgage, enjoy low payments and don't have to worry about rising rents.
3. Renters don't benefit from tax advantages. Homeowners get income tax deductions. Tax deductions for interest costs, for instance, save taxpayers thousands of dollars.
Emotional Satisfaction of Home Ownership
Besides losing out on making money with real estate, renters don't get the same satisfaction of home enjoyment that benefits home buyers. Many landlords won't allow you to paint your walls in colors that you desire. Also, you won't feel like fixing up the property with custom window coverings and you get little say in flooring materials. Because you can't make your personal statement, you won't feel like you're HOME as much as homeowners who feel emotionally connected to their property.
How to Buy Your First Home
The biggest barrier to homeownership is often accumulating funds for a down payment. People think they have to have thousands of dollars for a down payment. However, if you have good credit and a decent job, you can get a mortgage for a home with zero down. And you can finance some of your closing costs as well as ask the seller to help you pay a good portion of your purchase costs. With today's mortgage finance plans, you may be surprised to find out how much of a home you can afford with payments similar to what you currently pay in rent.
You may have to go out of the major metropolitan areas to buy a home. That's why so many people commute in Southern California. Affordable housing costs much less in outlying areas. But so do the rents. If you're renting an apartment for $3,300 in Los Angeles, you could buy a $500,000 home in Fontana. A client of mine just purchased a home in December 2019 and her mortgage payment, for a 3,000 square foot new home, costs less than $2,300. With her tax savings, she will pay even less than renting a small apartment closer to downtown L A.
If these amounts sound high to you, check your local area. Perhaps your monthly rent is only $2,000 and houses cost less than $500,000. Talk to a mortgage loan officer and see how much of a home you can afford.
If you're renting, make one of your priorities to buy your own home.