how soon after purchasing a home, can you sell it?

Question

My husband and I purchased our first home in Dec of 06', and we are ready to upgrade and sell it, for a bigger home. My question is how long do we need to keep it before putting it on the market? I heard something about a 2 yr clause. What is that and also can someone explain to me what capitol gain is and if that will affect us in the sale of the house and the purchase of a new one.

Answer 1

You can legally sell a house the same day you buy it, if you want to. Investors sometimes do this to make a quick profit. I don't know about any 2 year clause; legally the right to sell your property whenever you want is inherent in ownership.

However, as a normal consumer, it makes sense to wait as long as you can before selling and re-buying, since closing costs and sales commissions can really eat into your profit.

But you don't have to worry about capital gains tax. Married couples don't pay any capital gains on home sales unless the gain exceeds $500,000. Which I doubt yours does, since you've only owned it 4 months.

Answer 2

You can sell the house the same day the title is turned over to you if you want, although there might be a little delay for it to be recorded in your name.

The 2 year clause you have heard about is probably referring to the exemption from up to $500,000 (married, filing jointly) if you have lived in the house as your primary residence for two of the last five years.

Capitol gain is simply a different tax rate than your normal income tax rate. It has nothing to do with being able to sell your house or the purchase of a new one.

Answer 3

Basically, the 2 years is about paying income tax on the profit of your home. If you live i a primary residence less than 2 years, the profit (after paying all costs and mortgage and recouping any down payment) is taxed like it's income. If you live in a house longer htan 2 years, you're exempt for up to a certain dollar amount of profit.

I believe if you use the profit as a down payment on the next house you MAY be able to get around capital gains-- but ask your tax advisor.

Answer 4

you need to check your mortgage to see if there is a pre payment penalty for paying off the loan within a certain period of time. #2 if you sell the house for more than you paid for it you could have capital gains, but if you buy a more expensive house or you did improvements to it and have receipts to verify you most likely wont.