You’ve sold your house! Escrow has closed, and you’ve handed your keys to the new owners. While the deal is done, you have a few more things to do. In “House Selling for Dummies,” authors Eric Tyson and Ray Brown lay out things you can do to save money and increase your peace of mind after you sell.
Here are 10 of those tips:
Keep copies of all paperwork related to the closing and settlement.
Although it might be tempting to shred the paperwork or put it in storage, you’ll want to have it handy for April 15. When you file your taxes, you’ll need documentation for the expenses and proceeds of the sale. And after you file your return, you’ll want to keep the paperwork in case you’re audited.
Keep proof of improvements and prior purchases.
This is for tax purposes, too. The IRS allows you to add the cost of improvements to your home’s cost basis during the time you own the home, which is nice if you have a sizable capital gain. But to use this tax provision, you need to keep receipts for everything you spent on home improvement.
Stay on top of tax laws.
Because tax laws constantly change, you’ll want to keep current to avoid losing money. For example, a recent law allows you to exclude from tax a significant portion of the profits from the sale of your primary residence.
Put your proceeds in a money market fund.
If you sell and then don’t immediately buy, you’ll need a safe place to put your money. A money market mutual fund offers safety, a reasonable rate of return, daily access to your money and check-writing privileges.
Choose your next home carefully.
Scope out a variety of areas and housing options that meet your family’s needs.
Don’t feel pressured to buy.
Take your time purchasing your next home; rent for awhile if you’d like extra time or want to try an area out first before buying. “Keep in mind that you have two years to defer tax on your house-sale profits,” Tyson and Brown point out.
Reevaluate your personal finances.
If your situation changes before you buy another house – you get a promotion, have a baby, go through a divorce – you’ll need to rethink your finances and how much you can afford to pay for your new house.
Think about what you need from an agent to help you buy.
Carefully consider whether the agent who helped sell your house can meet your needs when you’re buying. Buying and selling require different skills. And, if you’re moving to a new area, you may want someone familiar with the area.
Think through your next down payment.
Brown and Tyson recommend putting at least 20 percent down on your next house in order to qualify for the best mortgage programs. If you can afford more than 20 percent, consider whether it’s better to put that money in the down payment or to invest the money elsewhere. “Younger home buyers willing to take on more investment risk should lean toward a 20% down payment, whereas older home buyers, who tend to invest less aggressively, should opt for larger down payments,” the pair recommends.
Remember to send change-of-address notices.
The U.S. Postal Service recommends you complete your change of address 30 days before you move.
Written by Darren Wilson, The Wilson Team