If I sell my house?

Question

How much approximately will I have to have out of pocket for closing costs? I am NOT buying another house, I'm going to rent. Just want to know how much cash I'll need if any?

Answer 1

Assuming that you are in the US, DJ B's comment about having to buy something within 24 months or facing tax consequences is based on an old tax law that was changed about 10 years ago. There is no requirement to buy another home to avoid taxes any more.

When selling, your closing costs are generally taken out of the proceeds of the sale, so unless your sales price is less than your current mortgage plus your closing costs, you won't need to bring any money to the closing.

Examples of closing costs that will need to be paid for are:
Realtor's commission (if using a realtor) - usually around 6% of the sales price, but negotiable with your realtor
Title insurance - often regulated by the state - often around 1% of the sales price; also, who pays for the title insurance (buyer or seller) can sometimes be negotiated
Payoff/Statement fees for your old mortage - up to $100 or so
Wire/Overnight delivery fees - varies
Pro-rated property taxes - varies
Recording fees - varies

You should be able to get an estimate of how much the closing costs will be from the title company you are going to use.

Also, after you close, if you were escrowing the homeowner's insurance and property taxes as part of your mortgage, you should get a check back from them. Plus, be sure to tell your homeowner's insurance company that you have sold the house - since the premiums are paid for a year at a time, you will probably get some money back from them, too.

Answer 2

AJ485 is almost right aobut capital gains. True that it was changed some years ago but there is a cap on it. Looks to be $250,000 depending on details.

If you're well under that, no problem. If you're close to that, or over, gather up all receipts for any home improvements you've done - they will come off the top of the capital gain.

Answer 3

For selling, you don't generally need to pay anything out of pocket at all. Unless you ultimately lose money, the sale proceeds will be used to pay everything you are responsible for up to that time.

Answer 4

It depends on if you use a Realtor, an attorney vs a title company to close. Have you checked with a tax advisor about the tax burden you could have if you don't buy something else within 24 months?

Answer 5

It depend upon the area you live and several other factors better to consult a real estate attorney.