Key considerations when selling a home today
First, think about home prices in your area, and in general. According to Zillow, home values in the U.S. are up 2.6% over the past year, but that may not be true where you live.
Speak with a real estate agent and get a sense of the market in your area. From there, you can figure out the price at which you should list your house — you can then subtract your mortgage balance and the real estate agent fees to get a sense of how much money you stand to make from the sale.
Since you’re in your 30s, you could potentially pocket a pile of cash to invest in your retirement, or maybe even your future child’s college education. At this stage of life, there’s plenty of time for that money to grow.
You could also think about keeping the home, renting it out and letting it appreciate in value. Then, you could sell it later in life and use the money to fund a comfortable retirement for you and your spouse.
Depending on the home’s location, it may be a place you and your spouse want to live in when you retire, but perhaps don’t want to raise kids in. So, before you sell your house, have that talk. You may decide that renting it out on a long-term basis makes more sense for the both of you.
On the other hand, if you’re newly married and want to focus on your relationship, you may not want the hassle of having another home to maintain and worry about. You may also find that you're not able to cover the entire cost of continuing to own your home via rental income, and the last thing a new marriage needs is a strained budget.
Also, if you’re going to sell your home and move into your spouse’s, you’ll need to get on the same page about who gets what and pays what.
For example, if your spouse will continue covering the mortgage on their home, will you agree to cover the utilities? Or will you let your spouse continue paying everything (which they were conceivably doing before you got together) but split the sale proceeds of your old home?
These are important conversations to have and you may want to consult a financial advisor for guidance, since it’s the type of situation that can be a touch complicated. It’s important to start off a marriage on the right foot, which means navigating a tricky financial decision as carefully as possible.
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Learn MoreCosts and strategies to consider when selling a home
Selling a home can be a lucrative venture, but there may be costs that could eat into your profits. In addition to real estate agent fees, there may also be real estate transfer taxes charged by your state. Your agent should be able to help you estimate what those costs may be.
You might also have to sink some money into your home to make it more marketable. That could mean updating certain features or making necessary repairs. You may also have to spend money to stage your home, though some real estate agents provide this service as part of their package.
The cost of paying for home staging largely depends on the size of your home. But Realtor.com says that, generally speaking, you can expect to spend $300 to $600 for a design consultation and $500 to $600 per month for each staged room. This means your costs could add up, depending on how long your home sits on the market.
Once you sell your home, you may also be looking at capital gains taxes. There is, however, a capital gains tax exclusion of $250,000 for single-tax filers and $500,000 for joint filers.
To qualify, the home has to be your primary residence and you must have owned it for at least two years. You also need to have lived in the home for at least two years during the five-year period leading up to its sale.
Keep in mind that improvements you’ve made to your home while you were living there can add to your cost basis, so it’s important to dig up records along those lines.
For example, say you’re filing jointly with your spouse, you bought your home for $200,000 and you’re able to sell it for $800,000. That’s a $600,000 gain, of which only $500,000 is exempt from capital gains taxes. But if you had put in a deck and patio that cost $30,000, that’s added to your cost basis and your gain is reduced by that much. You should know that real estate agent commissions can also be deducted from your capital gains.
If you find yourself sitting on a large pile of money after selling your home, you may want to consult a financial advisor for tips on what to do with it. In addition to saving or investing the funds, you could use the money to help or completely pay off the mortgage on your spouse’s house that you’re now living in, as just one example.
Or, you may decide to invest in an income property that you rent out. A financial professional can walk you through your options and help you make the most of your home sale proceeds.
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