It's a seller's market ...
Many homeowners remember the fallout that the housing bust had on real-estate prices. Even though most homeowners think of the financial crisis as having hit its peak in 2008 and early 2009, it took three more years for home prices to hit bottom.
Yet since early 2012, prices have climbed higher, and the Case-Shiller National Home Price Index is coming within spitting distance of matching its highs from 2006 and 2007.
Where you live is a key factor in determining just how much of a seller's market you can expect. By contrast, areas where economic prospects are less favorable have never fully recovered from the housing bust. The more lucrative a region's economic future appears to be, the easier you can expect it to be to sell a home.
... but mortgages could get more expensive
One key factor in how much sellers receive for their homes is how much buyers can afford. Low mortgage rates have helped fuel price increases in recent years. But some now fear that with the Federal Reserve having begun a new cycle of rate increases, a move higher for mortgage rates could make homes less affordable.
So far, the tiny quarter-point boost that the Fed made in mid-December hasn't pushed mortgage rates appreciably higher. Historically, though, tightening has generally led to increased rates on mortgage loans. Sellers need to be prepared for greater difficulty for prospective buyers trying to get financing.
Tax benefits still favor home sales
The biggest tax break for ordinary taxpayers is still the exclusion on capital gains for the sale of a personal residence. Single taxpayers can exclude up to $250,000 in gains from the sale of a home from tax, and joint filers get a double-sized exclusion of $500,000.
To qualify, you have to meet a couple of tests. First, the property in question has to be your main home. In addition, to get the full exclusion, you have to have lived in the home for at least 24 months in the past five years.
You can't have claimed a home-sale exclusion on tax returns for the previous two years. In some cases, partial exclusions are available, but getting specific tax advice from your accountant or tax professional is essential to make sure you're aware of all the tax implications of a home sale.
Selling a home is a monumental event, and it can introduce a number of complicated financial considerations. Being aware of those considerations and making a plan to deal with them will help the selling process go a lot more smoothly.
Source: CNNMoney/Motley Fool (Dec. 24, 2015)
For the professional guidance and advice you need to make a wise decision, call or text Bob Reid at Coldwell Banker AJS-Schmidt at 616.821.4375