Selling a house after 1 year in Utah comes with its benefits and disadvantages. Home purchases are considered long-term investments with most American’s staying in their home for around 13 years before selling. But the best plans can go a different direction and you might find yourself in a situation where selling your home after one year is something you’re considering. Read on for the pros and cons to selling a house after one year.
Pros of Selling a House after 1 Year
- It’s perfectly legal to sell a house at any time — you could sell the day after you close, it’s your property after all. While there are no legal ramifications to selling a home shortly after buying, you will find tax ramifications (read the list of selling Cons below)
- If you have a great opportunity that comes your way then selling–even if it means taking a monetary loss– then the gains from the opportunity can outweigh any losses that come from selling the house.
- If you choose to sell your house outright rather than renting it to cover your mortgage you can avoid the headaches and stress of juggling a real estate portfolio you probably weren’t planning for. If juggling multiple mortgages and being a landlord isn’t your thing then selling the house can make the most sense.
- If your finances change drastically due to unforeseen circumstances like death, divorce or job loss then selling your home could be the smartest and easiest way to avoid foreclosure and a huge hit to your credit. When an emergency or medical issue comes up that hurt your ability to pay the mortgage then it’s better to sell quickly and avoid liens on the property title, locking you in financial problems for years, unable to access the capital from the sale of the home.
- There ARE circumstances where you can avoid paying capital gains when selling a house within a year of purchase. If you are dealing with a career-related job relocation, divorce, death within your household, job loss, health-related problems or a destroyed or condemned home then there is a chance you can avoid the expense of capital gains that you would otherwise have to pay.
Selling a House after One Year: Cons
- Your mortgage could include a prepayment penalty so find this out before you decide to sell. With a prepayment penalty your lender could charge you extra fees for paying off your loan early and those fees could mean thousands of dollars.
- Unless the market has skyrocketed in less than a year (which can happen!) then you are bound to lose out on your investment. Selling a house within a year of purchase is considered a bad financial move.
- If you sell a house after one year then you’ll be dealing with all those same “extra” costs that you faced just one year ago. The cost of listing, staging, inspections, realtor fees and closing costs, they all need to be paid. Again. And you’ll be paying fees on a new house as well. Selling a house after less than a year can mean spending a lot of money in a very short amount of time.
- Taxes or capital gains need to be paid when you sell a house. The amount you pay is determined by a lot of factors but you can’t usually avoid them completely.
Money Matters to Consider When Selling a Home Within a Year
Don’t go into your home sale blind, know what costs you need to take into account to make sure selling your house is something you can afford.
- Consider Selling Costs. At closing you have to pay off the mortgage balance (which won’t have changed much in just one year), as well as closing costs (you can expect these to be around 1-% of the sale price).
- New Home Costs. If you’re selling one home in order to buy another then plan for the down payment and closing costs on your new home.
- Plan for Capital Gains or Taxes. In Utah if you sell your home AFTER one year then you’ll be required to pay capital gains, if you sell your home WITHIN one year of purchase then any money you may earn from the sale of your home will be taxed as income tax. Note that you would not have to pay taxes or capital gains if you do not make a profit on the sale of your home.
- Realtors, Staging, Listing etc! All those costs you pay when selling a home — the fancy pictures, the beautiful staging, the right realtor — yep, you’ll still be paying those, AGAIN after just one year or less when you choose or need to sell your home after a short amount of time.
The reality is, selling a house within a year or purchase can be very expensive, but you do have less-expensive options! Gary with Gary Buys Houses will not require working with a realtor, seeing a staged home with professional photos or paying for expensive inspections. Save on all those extra fees and sell your house for cash with a quick closing time when you work with Gary. He is a trusted home buyer in the state of Utah and can help you sell fast for your situation without any drama or fuss. Contact Gary about purchasing your home today.