Reviewed by: Brandon Brown

Whether it’s buyer’s remorse or a new opportunity on the horizon, homeowners don’t always hold onto their property for decades. While experts advise against it, selling a house within a year of purchase is your choice to make. Before you plant a For Sale sign in the yard, however, let’s take a look at the costs and options involved in selling a house after a year.

Legal Implications and Resale Restrictions

Let’s say you opt to get your floors refinished before moving into your brand spanking new home, and the contractor falls in love and makes you an offer to buy it on the spot. The legal answer to “can I sell a house I just bought” is yes—you can turn around and resell your home after a year, a week, or even an hour after closing on your purchase of it.1 There are generally no restrictions on a resale of your property—but there are costs and penalties that can add up.

Tax Considerations and Capital Gains

The government tends to treat real estate in two different ways: either it’s a home to live in, or a make-it-rich investment. If it’s an investment property, then they take a significant cut of the pie in the form of real estate capital gains tax every time you sell the property at a profit. On the other hand, if you sell your primary residence, you can take a hefty exemption to the capital gains tax on any profit ($500,000 married or $250,000 single).2 Now, you may be wondering, how can I avoid capital gains tax on the sale of my home? Truth be told, the problem with reselling your home quickly is that, unless you qualify under certain hardships, you have to have lived in your home for at least two years for it to qualify as a primary residence for the capital gains exclusion to take effect. Otherwise, you could pay a tax rate as high as 37% on any profit you make from selling your house after a year.3

Mortgage Implications

Lenders earn big on interest over the life of a mortgage loan, and paying them off early cuts off their profits. Most mortgages include a penalty on prepayment of the loan, which is typically between 2 – 5% of the loan amount.1

Financial Readiness 

A home sale isn’t a simple trade of commodity for cash. In addition to the potential tax hit and mortgage prepayment penalty, are you prepared to pay:

• Closing costs of 2 – 5% of the sale price4

• Upfront costs for repairs and updates ($5,400 on average)5

• Deep cleaning and staging

• Real estate agent commissions, typically 6% of the sale price6

• Moving costs, which average $900 – $2,400 local and $2,600 – $6,900 long-distance7

So can you sell your house after a year? Yes—but it’ll cost you. All told, moving out and selling a $400,000 home after a year could cost $40,900 to $70,900 even if you don’t incur capital gains taxes. These financial aspects emphasize the importance of the questions to ask before selling a home too prematurely.

Addressing Property Perceptions 

Agents and buyers look at prior sale dates and prices shown in home listings. A property that’s up for sale again after a year is a red flag  that can suggest:

• There’s something wrong with the property itself

• The current owner is an investor who was unable to rent or resell at a significant profit

• The home may have suffered from poor maintenance or decision-making

Your listing language and sales approach will need to answer doubts that a quickly resold property raises for any potential buyer.

Selling to an iBuyer 

What if you could skip the viewing preparation, agent commissions, and waiting game of listing, marketing, and negotiating a traditional home sale? An iBuyer is an investor that pays fair market value for your home in cash. The viewing and closing process are usually virtual, with the addition of an independent local inspector scheduled at your convenience. There are no contingencies for financing or juggling schedules—you receive an offer, and if you accept, can close on the sale within a few days, weeks, or months based on your preference. If you want to sell quickly and easily for a necessary move or other deadline, an iBuyer can cut through the noise and drastically reduce your timeframe. And since they’ll extend an offer with no obligation, it makes sense to reach out before you sign with a real estate agent. Having a cash offer from an iBuyer in hand will help you decide which home selling process is right for you.

Ready for Our Offer? 

If you live in the counties of Los Angeles, Orange County, or San Diego, give FlipSplit a call. We offer fair market value for single-family homes, renovate them based on current homebuyer preferences, and resell them at top dollar. Unlike other iBuyers, FlipSplit provides:

• Payment of all closing costs—you receive the number on our offer in total

• Communication and a window into the renovation process

• A 50/50 split on extra profits after the sale

It’s a win-win situation for sellers who want to offload the upfront costs and work of maximizing a property’s value without losing the profit opportunity. Ready to learn more? Visit FlipSplit today and request an offer on your property.  

Sources: 

1. Bankrate. Selling your house after 1 year or less. https://www.bankrate.com/real-estate/selling-your-house-1-year/

2. IRS. Topic No. 701, Sale of Your Home. https://www.irs.gov/taxtopics/tc701

3. Investopedia. Capital Gains Tax on Home Sales. https://www.investopedia.com/ask/answers/06/capitalgainhomesale.asp

4. Bankrate. How much are closing costs for home sellers? https://www.bankrate.com/real-estate/closing-costs-for-sellers/

5. CBS News. Here’s how much home sellers spend to spruce up their property before listing them. https://www.cbsnews.com/news/home-improvement-steps-before-selling-house/

6. Nerdwallet. What Are the Closing Costs for a Home Seller? https://www.nerdwallet.com/article/mortgages/closing-costs-home-seller

7. HomeAdvisor. How Much Do Movers Cost? https://www.homeadvisor.com/cost/storage-and-organization/hire-a-moving-service/