Kelly Bullis
Do higher interest rates scare you out of changing or downsizing your home situation? Actually, rates are not that high. Over the last 10 years, they were abnormally low. They are currently back in the range of what we were used to before the Obama era began. (FYI, when I bought my first home in 1981, the rate was 16.67%. It went down steadily for the next 30 years.) Now, there are a lot of baby boomers, like me, who are thinking the current home they have is too big. Here are some thoughts to remember when selling your home.
First, know what your current home is worth and what your potential replacement home might cost. You can use Zillow or other online services to get ballpark ideas.
Second, use a knowledgeable real estate broker who has extensive knowledge in the markets you’re are selling/buying in. Negotiate the commission. Hey! You don’t get what you don’t ask for.
Third, declutter your current home. Pack away the “I can’t part with stuff” then look at everything else and ask yourself, “Have I even been aware of this item’s existence, or did I just now rediscover it?” Don’t fall in the trap of thinking you might find some use for it. If you haven’t used it for a long time, consider selling it, giving it away, or hauling it off to the dump.
Fourth, stage your home. Do a super deep cleaning, even consider hiring a professional to do that. Make your house look visually appealing to a potential buyer. There are professionals you could hire to help you with this step. Maybe time to do some touch-up painting, etc.? A well staged home usually sells faster and brings in a significantly higher price.
Fifth, know your current home’s tax basis. What did you pay for it and when? What improvements have you made over the years. Try to write out a list of each approximate date and amount. A “home improvement” is any expense that materially adds to the value of your home, significantly prolongs its useful life, or adapts it to a new use.
Sixth, know the potential tax impact of selling your home. For a married couple, the first $500,000 of gain is not taxed ($250,000 for singles), the remaining gain (if any) is taxed at regular capital gains rates which top out at 20%. There are other tax issues, so consulting with your CPA is important and worth it. It will help you know how much you will have available to use on purchasing your replacement home.
Seventh, know the other costs associated with your potential new home, especially if you are moving to a new state or region. Property taxes, HOA dues, utility costs, health care costs/availability, etc.
Have you heard? Deut. 26:11a says, “You shall rejoice in all the good which Yahweh your God has given to you, and to your house…”
Kelly Bullis is a Certified Public Accountant in Carson City. Contact him at 775-882-4459. On the web at BullisAndCo.com. Also on Facebook.