1 Calculate How Much Money You Will Net From the Sale of Your Home
You need to subtract all mortgages, liens, pro-rated property taxes, agreed upon commissions and all contractual obligations. Then check with your CPA to see if you will owe income tax on any portion of that. In the following example all dollar amounts and percentages are hypothetical as all home sales are different.
Hypothetical Example: $500,000 Final selling price
-$200,000 1st mortgage
-$30,000 2nd mortgage or equity line
-$500 Property tax pro-ration
-$27,500 5.5% (negotiable) RE commission
-$5,000 Seller credit to buyer for closing costs
-$2,000 Transfer tax (varies from .11% to 1.61%, buyer / seller split is negotiable)
-$1,000 Miscellaneous fees, reports, notary, wire transfer, HOA fees, etc.
=$234,000 Net proceeds to you.
With reference to any income tax due if you sell the home for more than you bought it for, consult your CPA. Today, in general, if you owned a home for the last 5 years or more and lived in that home 2 of the last 5 years prior to the sale then up to $250,000 of profit is tax-free. If you are married and file a joint return, the tax-free amount doubles to $500,000. As tax laws are always changing you absolutely should consult your CPA when selling a home.
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