How Soon Can I Sell My House After Purchase? (Your Trusted Guide)

February 16, 2023

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Are you a homeowner asking, how soon can I sell my house after purchase? This is vital, especially for those who are considering property flipping or other careers in real estate. Some new homeowners might also realize that they’re simply in over their heads with their purchase!

While you might assume that you can do anything you want with your property, this isn’t always the case. In most areas, a long list of laws can affect both buying and selling a residential home. Also, it’s helpful to consider why you might keep a home after buying even if you can sell it legally. With this in mind, note a few added details about selling a home soon after purchase.

How Long Do You Have to Keep a House Before Selling It?

Currently, there are no laws that demand you keep a house for a certain time before selling it. You could turn around and decide to sell it the next day. However, please keep in mind that there are costs associated with listing the house, including realtor commission, closing costs, capital gains tax, and more. Typically, real estate experts recommend you stay in the home for at least two years to avoid excessive taxation and to make your money back on the home.

Also, note that laws affecting purchasing and then selling shouldn’t affect inherited homes. Consequently, if you’ve found yourself in possession of a home after a death in the family, you’re probably free to put it on the market immediately! However, note if there are any liens on the home or estate before deciding to sell. These can affect your plans to sell the home quickly and any profits you might receive from the sale.

 

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How Soon Can I Sell My House Without Losing Money?

No two home purchases and sales are alike! There is no “one size fits all” answer to how long you should keep a house. Additionally, note that the real estate market can go up and down anytime. Consequently, your home’s value and resale price can change quickly.

However, most homeowners find that they might need to wait about two years after purchasing to reach a breakeven point. This refers to when they can sell a home without losing money. While this is generally true, remember that it’s also not a “hard and fast rule”!

For instance, has the market taken an upturn since your purchase? If so, you might be surprised to see your home’s increased value. Also, a low inventory of houses in your neighborhood can make yours more valuable. As such, buyers might start a bidding war for your property.

Additionally, consider how much you paid, including closing costs, at the time versus the home’s current market value. As an example, did you manage to scoop up an underpriced foreclosure? If so, you might break even on that sale far more quickly than in two years!

A dip in the real estate market can lower your home’s value. High loan interest rates can also mean that it takes longer to start paying down the principal. That can also mean a longer breakeven point. Other shifts in the real estate market can also lower your home’s value.

Is It Worth Buying a House for 2 Years?

Again, there is no “one size fits all” answer as to whether a home is worth your investment. A real estate agent or investment expert can offer advice on a home you’re considering purchasing. However, you might note some considerations to keep in mind:

  • Are you considering making repairs or improvements to the home after purchase? Certain upgrades can increase its value and your equity in the property.
  • On the other hand, certain needed repairs might reduce your expected sales profit. For instance, you might only see your home’s value increase by 70% the cost of a new roof. So, if you spend $10,000 on that roof, you might only raise your home’s asking price by $7000. In turn, two years wouldn’t be enough to earn back that cost and expected profits as well.
  • Are you expecting changes to the neighborhood that might increase a home’s value? This can include businesses moving into the area or other such improvements.
  • Would buying a home and keeping it for that time be cheaper than renting? Remember, renting an apartment doesn’t earn you any profit over the years! Even if you sell a house and just break even, at least you won’t lose money in that time.
  • Are home prices in that area increasing and, if so, at what rate? Slow growth or decreasing prices might indicate a soft market and lower potential profit!

Lastly, note that you might have other options if you can’t sell a home for the profit expected. For instance, could you hire a rental agency and rent the home for another year or two? You might also consider using it as a short-term rental such as through Airbnb or Vrbo. This can allow you to hold onto the home for as long as needed to build equity and potential profit.

 

how soon can i sell my house after purchase

How Do I Avoid Capital Gains Taxes on My House?

Capital gains are profits from selling investments such as stocks, bonds, and real estate. A capital gains tax are taxes on that profit. When you sell a house for more than the purchase price, the IRS might tax those earnings!

However, the IRS doesn’t necessarily tax all those earnings and there are exceptions to the tax completely. For instance, you typically need to pay capital gains taxes on homes you owned for less than two years in the five-year period before you sell it. Also, the tax applies to homes that are not your principal residence.

Singles can exclude $250,000 of the capital gains, and married couples filing jointly can exclude $500,000. This exclusion applies to only one home. So, if you’ve taken this credit on another property, you probably can’t use it twice on your tax returns!

In short, the best way to avoid paying capital gains taxes is to live in a home as your primary residence for at least two years before you sell it. However, remember that there are many factors affecting capital gains taxes! Also, the tax code can change at any time.

In turn, it’s vital that you consult with a real estate agent and an accountant if you have questions about a potential tax bill after a home sale. Above all, ensure you understand your tax liability before selling and especially if you might start flipping properties. These short-term ownership arrangements are often hit with the highest tax bill after a sale! Knowing more about current tax laws can ensure you make the best financial decision overall.

What is the Mortgage Prepayment Penalty?

A mortgage prepayment penalty is a fee that a lender might charge for paying off your mortgage loan too soon. Usually, the penalty applies when a borrower makes additional payments to pay off the principal balance of their loan ahead of time. If you have an FHA loan, this will not be the case. However, it's something to look out for if you want to buy, flip, and sell.

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Reasons Homeowners Sell Sooner

Homeowners may sell the house sooner because the fair market value has increased; they need to relocate for a job or family situation, health emergency, or for financial reasons. If you're flipping a house, it's likely that you'll want to sell the property sooner rather than later in order to make a profit.

In these situations, time is of the essence and sellers are not as worried about closing costs or even negative buyer perception. The house will need to be sold one way or the other.

Contact Our Team for Advice on Selling

Sarasota Home Buyers is happy to help answer the question, how soon can I sell my house after purchase? However, it’s still vital that you consult with an attorney, realtor, or accountant when it comes to legal and tax-related questions. Also, if you’re ready to sell your home for cash, fast, call our Sarasota home buyers. We’ll schedule a FREE consultation and inspection and prepare a fair cash offer at no obligation. Additionally, we’re happy to answer your questions about cash home sales throughout the entire process. To find out more, don’t hesitate to contact our team today!

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