Stay in house or move up
Say if your primary appreciates by ~500k(adjusted for realtor commission)- not too unreasonable if you bought in last few years. Is it better to sell and take the tax free cash (for married) and buy another house of equivalent or slightly greater value or keep on living in same property. Pros of selling: You get tax free cash Baseline of new house is higher Potentially repeat if house continues to appreciate Cons: Property tax goes up Interest rate might be higher If you sell at a later time when property gain is more you have to pay taxes and can’t really move “up” since cash in pocket would be less The recommendation is that never think of your primary house as investment but government incentivises you to sell when gain is <=500k.
What's the point of buying a new house which is more or less the same value as the old one? It makes sense if you are not buying another house or buying a expensive house or you think the new house location prices will appreciate faster than old location. Else I don't see the point of wasting money on broker fees.
You get tax free cash and possible to buy a bigger house in future .
Bigger house might cost more than old house market cost + 500 k cash. Are you waiting for steeper downturns in market to make a move? If yes then makes sense or else its dumb
6% hit to sell plus higher property tax base on new home is not so attractive after you think about it. It makes sense if you need a bigger place or new location though.
Some agents charge 4% but sure fair point
Say I come around to your house and give you the following offer(an insurance policy) : For a one time premium of 4% of your house value, the policy will pay you back 40% of any gains in the house from that point on WHEN you decide to sell the house. I take the 4% cash and you keep the insurance policy docs. Will you take the above offer?
Edited to 40% as that is a more realistic tax rate.
Why would I take that if I can keep 100% of gains by paying the 4% cost to sell
Just curious, why is it tax free?
Tax rules . First 500k gain is tax free on primary house gain if married. 250k if unmarried
Wow
If you can afford, a better solution may be to rent out the current place and upgrade. The rental income can be offset by depreciation and interest
Are you planning to rent out the additional rooms?
No
There’s no free lunch in a free market. You expect to occupy additional rooms for “free”, but I’d say there must be a catch somewhere.