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Selling Your Home

There are just as many reasons for selling a home as there are for buying a home.  Whether the reason is you are relocating, trading up or down to a larger or smaller home, or you plan to retire and use the equity you have in your home as income.

Whatever your reasons for selling your home you goal is to sell your home at the highest possible price and keep as much of the profit as possible. Current partisan politics has created very few real benefits for us as taxpayers.  However, our home seems to be the only hedge we have against investment taxation.  In 1996, during the heat of the 1996 Presidential election, Bob Dole made a campaign promise that the first $250,000 in profits from the sale of your home would be tax-free.  Bill Clinton countered by doubling the offer to $500,000.  Currently, our home is one of the few tax shelters that the average citizen can afford.  For a single parent family (one head of household) the first $250,000 profit from your home sale is tax-free.  If you are married filing jointly, this number climbs to $500,000.  Keep in mind this is profit on the sale, not selling price.  For most of us, we will never pay a dime in taxes from the sale of our home. 

There are three rules which affect this regulation

1. Up to $250,000 of profits from the sale of a home is tax-free or $500,000 if you are married filing a joint return.
2. You must have lived in the home for 2 of the past 5 years prior to the sale of your home, and
3. You only may use this tax benefit every other year.

Under the old rule you must be 55 years old or older.  The deduction was only $125,000 (in profit), and the tax benefit only could be used once in your lifetime.

Preparing your Home to Sell

If you have decided to sell your home, its time to get it ready for the market.  The better the home looks, the higher the selling price you can expect.  A house that is nicely decorated and well-maintained will sell more quickly, at a higher price, than a comparable house that has not been properly prepared.

Two items that you can use to improve the look of your home and the appearance of maintenance at low cost are new carpet and fresh paint. For about $3 per square foot of home space, you can spruce up your home cheaply in buying new carpet and paint, and the return in value will double the actual cost of the improvement.  Unless you plan to sell your home as a fixer, upper (and lower home value), a facelift will pay dividends.

Next, work on landscaping and add curb appeal.  Plant fresh flowers that bloom for extended periods, trim the hedge, paint the front door and shutters, and put out the welcome mat.  Make the house look hospitable and homey.

On the interior, move all the excess furniture into storage, so the interior appears spacious and bright.  While the home should appear lived in, you do not want to show clutter.  Clutter tends to decrease the psychological appearance of space.

Take the time to inventory obvious maintenance deficiencies. If a cabinet hinge is broken, leaving a door sagging, replace the hinge.

Be prepared for the obvious questions a home buyer will ask.  Have receipts ready for energy consumption, warranties on roofing or siding, and any service records you may have for appliances.

Sell Your Home Yourself or Hire a Real Estate Agent

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