How Long Should You Live in a Home Before Selling?

Very few houses turn into “forever” homes. The fact is most people who buy find that their needs change over time, and eventually, they move on.  

 

The National Association of Realtors reports that the average homeowner remains in their house ten years before selling. The most common reasons for selling are a growing family, divorce, or a new job opportunity. Sometimes these events happen suddenly, and the homeowners are forced to sell more quickly than they’d like, which leads to losing money due to all the taxes and fees you’ll have to pay. 

 

So, what is the right amount of time you should stay in a home? Let’s look at some of the things to consider: 


 

Factors To Consider

Moving is stressful and inconvenient, and what makes the process even worse is when it ends up costing you money. When selling a home, you will be responsible for paying real estate agent commissions. 

 

Depending on how the deal is negotiated, you may also end up covering other closings. You’ll also want to consider how much you’ll have to pay for moving expenses and all the new furnishings you’ll need when you move to a new home.  

 

Perhaps the most significant factor to consider when deciding how long to live in a house before moving is what’s called capital gains. A capital gain is the profit made when you sell an asset. The profit is then subject to taxes, and the amount of taxes can be rather excessive. It can be a little bit confusing to understand, but essentially, the capital gain gets taxed as if it was earned income. So, depending on your annual income, that tax amount could be upwards of 20%. Ouch.  

 


Can I Avoid Capital Gains Taxes?

The good news is capital gains on real estate don’t apply to everyone. They can be avoided if you lived in your house for at least two of the last five years. So, if you’ve lived in a home for the last six years, you don’t have to worry. But if you’ve only been in the house for a year, any profit you make when selling is going to get hit hard. 

 


What’s The Market Like?

If you aren’t sure if you want to move or not, something to look at is the real estate market. Today, the market heavily favors sellers. That means you’ll likely have people lined up around the corner hoping to buy your house. Home values have also appreciated substantially in the last year, so you should have plenty of equity in your home, which could make selling worthwhile.

However, if the market was favoring buyers or if there were to be a dip in home values, you would probably want to reconsider selling unless you absolutely had to.  

 


Bottom Line

There is no firm answer to how long you should live in a house before selling. If you are able, it would be best to wait at least two years to avoid paying the taxes. 

However, it is best to wait even longer to recoup the costs of moving and closing costs that you must pay when you buy a new home.  

 

If you’d like more information about buying or selling, don’t hesitate to reach out.

THE WAY BUYING AND SELLING REAL ESTATE SHOULD BE ... YOUR WAY!

Whether you are a first time homebuyer, you are looking for your next home, or you've decided to sell, LUXRE is here for YOU every step of the way!

Like this article?

Share on facebook
Share on Facebook
Share on twitter
Share on Twitter
Share on linkedin
Share on Linkdin
Share on pinterest
Share on Pinterest