What are the tax implications for selling or refinancing your home within two years of purchase?

Answer 1

Assuming that you are in the US, aside from being able to amortize discount points on a refi, there are no tax implications. Discount points paid on a purchase mortgage are deductable in the year paid.

As long as the house is your primary residence- you have lived there in 2 of the last 5 years- your gain up to $250k/$500k for single/married is tax free. Any gain in excess of that is taxable.

Answer 2

Refinancing - no tax implications.

Selling within two years of purchase - you would not be eligible to exclude any gain (up to $250,000 single/$500,000 married filing jointly) if you didn't own the house for at least two years of the previous 5 to the sale. You also haved to have lived in the house as your primary residence to take the exclusion. If you have a loss on the sale, no tax consequences, but if you have a substantial gain, consequences should be considered.

Answer 3

I think you have to occupy the house for 2 of the last 5 years to be exempt from capital gains tax. If you sell within 2 years, you won't meet that test. Ask a professional if you need to claim a capital gain.

Answer 4

I don't know that you'll have TAX implications to be concerned about -- the problem will be that in the early years, the vast majority of your payment sum goes to INTEREST, not principle. therefore, you balance does not go down noticably so you will not have increased EQUITY in the property. Unless you had a SUBSTANTIAL down payment, your cost to sell the house, may be more than you can get for it, in many cases.

Your concerns are Interest and Equity concerns, combined with selling costs; not tax concerns.