Sellers: Consider Capital Gains Before Selling

Even though we’re in a hot seller’s market, you may not want to sell right now.

Considering how much homes have increased in value recently, many people are wondering whether they should sell their homes or cash in on their equity. Selling may or may not be a good idea, so today I’ll give people in this position something to consider: capital gains taxes.

Many people don’t really think about capital gains taxes until after their house has already been sold. When you purchase a home, the IRS determines whether you’ll pay short-term or long-term capital gains based on how long you’ve lived in the home.

If you’ve lived in the home for less than a year, you’ll pay a higher capital gains tax, so be sure to check with your CPA to find out exactly how much yours would be if you sold. For simplicity’s sake, you can expect to pay around 22% of your total profit. If you’ve lived in the home for more than a year, your capital gains taxes are reduced. Again, your CPA can give you a more exact figure, but you’re looking at somewhere around 10% to 15%.

 "If you’re pretty close to that two-year mark, then it may be a good idea to hold off on selling."

Now, if you are in a position where you have lived in the home for at least two out of the last five yearsand you’re single, you are exempt from having to pay capital gains taxes on up to $250,000 worth of profit. If you’re married, you’re exempt for up to $500,000. If you’re pretty close to that two-year mark, then it may be a good idea to hold off on selling.

Hopefully this has given you some helpful information to better inform your decision to sell or not to sell.

If you have any questions or need assistance, give us a call or send us an email. We’d love to be a resource for you.

How Interest Rates Affect Your Buying Power

How rising interest rates could affect your ability to buy a home.

Interest rates are on the rise, so what does this mean for you? If you’re thinking about buying a home soon, you need to know what’s happening. Interest rates are in the low 4% range, so I want to break down what that means for your pocketbook.

A chief economist at a large brokerage recently said, “With certainty, by the end of this year, interest rates will be 5.5% to 6%.” That’s a huge jump from where we are now—up to a 2% difference. That might not sound like that much, but it is.

"Act sooner rather than later to protect as much of your money as possible."

The median home price in Pierce County is $525,000. Let’s say you own a home at that price, and you’d like to move into a larger house that would cost around $750,000. If you put 20% down on that home and rates were at 4%, your monthly payment would be $2,864. If rates rose to 6%, your monthly payment would be $3,597 for that same house. 

That’s a difference of $733 per month. Over a year, you’d pay $9,000 more, and over the life of your loan, you’d pay $264,000 more. I want to make sure you’re aware of how much rates affect your monthly payment. If you want to move, I recommend acting sooner rather than later to protect as much of your money as possible. 

A lot of people don’t want to sell until they find where they’re moving to, but there are a few strategies you can use to help. You can purchase the new property first and sell your home immediately afterward. There are ways you can structure and finance that option. 

If you know someone who would benefit from this information, please pass this on to them. As always, if you have any questions, I’d love to help. Just call or email me.

Using a HELOC To Make Your Move

Here’s how you can use a HELOC to buy a new home before you sell. 

Are you looking to move? If so, you probably need to sell your old home before you can buy a new one. If you’re in this position, how can you sell your house without going homeless? I have a great tip that’s helped plenty of our clients, and I want to share it with you today. 

The big issue in our market right now is our low inventory. Sure, you can get a great deal on your home, but what will you do when you have to buy? Fortunately, we’ve worked closely with lenders to help solve this situation, and you may be able to use a home equity line of credit, or HELOC, to make your move. 

So how would this work? Let’s look at an example: Say you want to move up from your existing house into a bigger one. Because homes have appreciated so much in the last few years, you probably have a lot more equity than you think. In this instance, you can use a HELOC to pull the equity out of your home. It doesn’t cost any money until you deploy the funds, so you can use that cash to pay for a down payment on your new home. 

"You probably have more equity than you think."

Even if you aren’t looking to move, there are plenty of good reasons to take out a HELOC, such as an emergency fund. While I’m not a financial expert, I will caution against spending your equity on things like expensive cars. If you need a lender to speak with about this topic, please reach out to us. We'd be happy to put you in touch with a great one.

If you have questions about today’s topic, please call or email my team. We are always happy to be a resource for you!

Are Pre-Inspections Worth It for Home Sellers?

As a home seller, should you order a pre-inspection before putting your home on the market?


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If you are planning on selling your home, should you get a pre-inspection before you put your home on the market? 

There are two different schools of thought on pre-inspections. 

The first is that yes, getting a pre-inspection is a good idea. It will cost $400 to $500, and the home inspector will come up with a list of deficiencies. You can make those repairs or disclose those deficiencies to potential buyers. You have to disclose any deficiencies that you are aware of in your home. 

The other school of thought that I lean toward is that you shouldn’t waste your money doing a pre-inspection. Chances are that you’ll spend that $400 or $500 and when the buyer comes along, they will pay their own inspector to examine the property. They want to make sure that the inspector looks out for their best interest, not your best interest as the seller.

You shouldn’t waste your money on a pre-inspection.

The inspector the buyers hire will look at the inspection that’s already been done and find more repairs. After all, the buyer’s inspector wants to earn their keep, right? Then, you have even more things that you may need to spend money on or repair that might not have been an issue in the first place. 

If you want to net the most money possible on your home sale, I recommend not going the pre-inspection route. 

If you have any other questions about selling your home, just give me a call or send me an email. I would be happy to help you!

Selling in 2018? These 5 Tips Can Help

Have you been thinking of selling your home in 2018? If you have, think about utilizing these five tips.


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If you’re thinking of selling a property in the upcoming year, there are five tips you can use moving forward.

1. Declutter and simplify your house. Doing this is an amazing feeling. Getting rid of all the extra stuff you’ve accumulated is a great first step to selling your home.
2. Interview real estate agents. Before you make any major changes or move too far into the process, you should start talking to professionals. Also, all agents are not created equal. It’s important to find someone who truly knows what they’re doing.
3. Make repairs as suggested by your agent. There are a lot of projects sellers might assume would be a good idea, but some things simply won’t bring a good return. Many of the repairs your agent could suggest might be small details you hadn’t previously noticed.

Set your transaction up for success from the start by getting a pre-appraisal.

4. Stage your home. Homes that are staged professionally sell more quickly and for more money across the board.
5. Get a pre-appraisal. Rather than waiting to see whether or not the deal might fall through later down the line, get an appraisal done ahead of time so that you know you’re in the clear. Right now, one in four real estate transactions falls through due to appraisal issues. So, set your transaction up for success from the start by getting a pre-appraisal.

As a bonus tip: the presence of the colors red and yellow will subconsciously influence people to buy. Having red and yellow flowers in your yard, for example, can help you promote buyer interest.

If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.

How to Avoid Paying Capital Gains Tax

Today I want to talk to you about the “Two of Five Rule,” the best way to avoid paying capital gains taxes.


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How can you negate capital gains taxes during the sale of your home? I’ll answer that and draw out an example for you in the video above today.

Let’s say you are going to sell your house for $600,000, but you originally paid $300,000 for it. Your tax will be based on how much profit there is between that spread. The closing costs will be about $50,000 and you can write off any capital improvements you’ve made. As an example, I used $20,000 in capital improvements, which puts your new base at $530,000 after you subtract the closing costs and capital improvements.

From the $300,000 purchase price to the new base of $530,000, that’s a $230,000 spread. That is the amount the IRS will tax. The good news is something we call the “Two of Five Rule.” If you are a single person and you have lived in the house for two out of the last five years, the IRS will allow you to be exempt for up to $250,000 worth of capital gains. So, with our example, you won’t owe a penny of capital gains tax.

Make sure you’ve lived in the home for two out of the last five years.

If you’re a married couple, you get to double that exemption to up to $500,000 as long as you have lived in the house two out of the last five years.

This means if you have lived in your house for a year and 10 months, it’s best not to close until after you have hit that two-year mark. Otherwise, you’ll lose out on the exemption. On the flip side, if you moved out of the house a couple years back and have been renting it, you want to make sure you sell it when you can still say you lived there for two of the last five years.

If you have any more questions or are looking to sell your home, please don’t hesitate to give us a call or send us an email. We look forward to hearing from you!

The Top 5 Advantages of Selling Your Home During Winter

Selling your home during the wintertime might actually be a better option than waiting until spring or summer. There are five main reasons for this.

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Should you try selling your home during the winter months?

The answer can depend on where you are specifically located, but there are five general advantages to selling in winter rather than waiting until the change in season:

1. There is less competition from other sellers in winter. If everybody else has the same idea and wants to wait until spring or summer, why would you want to get stuck with that much more competition? As the flowers bloom, so do the other ‘For Sale’ signs around town.
2. You won’t have to deal with as much foot traffic coming through your house for showings. There won’t be as many people looking at your house in person, but the ratio of buyers who are actually serious about buying is far higher. This means you won’t be inconvenienced as much as you would during the spring or summer months.
3. Interest rates are still very low. As of right now, they’re hovering around 3.5%, which is insanely low. However, they won’t stay that way forever. In fact, they may not stay that way for much longer at all. As they begin to rise, the buyer pool begins to shrink.
4. Buyers are far more serious this time of year. Remember—this is the time of year when employees are being transferred by their companies to new areas, and these people need a house soon.
5. Homes show far better during the holidays. Who doesn’t like a good Christmas lights arrangement or a crackling fire?

Interest rates are low right now, and competition is soft.

If you have any more questions about this or any other real estate-related topic, please feel free to reach out to me by phone or email. I look forward to connecting with you soon!