The home selling costs range from 5% to 10% of the sale price. This article will break down the three main cost categories and offer tips to minimize expenses.
Revealing Home Selling Costs You Need To Know
Generally, home selling costs will range from around 5% to 10% of the sale price. For example, if your home sells for $800,000, expect total home selling costs between $40,000 and $80,000.
Here are the key areas where these costs arise:
Agent Commission
The largest home selling cost is the real estate agent commission. It typically ranges from 3% to 6% of the sale price. This fee covers both the listing agent and the buyer’s agent.
For full service, which includes staging, professional photography, and buyer search, the higher rate applies. However, opting for reduced services could lower the home selling costs to 2%-3%, depending on your specific needs.
Understanding the Home Selling Costs You Shouldn’t Overlook
Home Preparation and Moving
Preparing your home for sale is crucial and part of home selling costs. These expenses usually account for 1% of the sale price.
Common costs include repairs, improvements, landscaping, and touch-ups. Home staging, involving professional decoration for photos and open houses, is also important. Additionally, moving costs, such as cleaning and hiring movers, add to the total home selling costs.
Closing Costs
After accepting an offer, closing costs, part of home selling costs, typically range from 1% to 3% of the sale price. These include escrow and title fees for legal and financial ownership transfers. In some states, attorney fees are also required.
If applicable, the seller must pay and transfer HOA fees during closing. Additionally, if the sale closes near a tax deadline, the seller pays property taxes, reimbursed later through escrow.
Capital Gains Tax
After deducting all home selling costs, if you have a profit, you may owe capital gains tax. The tax rate varies by state, typically between 20% to 30% of your profit.
Here’s how to remarkably lower your home selling costs
Save Your Home Improvement Receipts
It’s crucial to keep all your home improvement receipts. These expenses are part of your home selling costs. You can deduct them from your selling price, reducing your taxable gains.
Carefully store your home improvement receipts to help reduce home selling costs.
Primary Residence Exemption
If the home is your primary residence, you can deduct $250,000 from home selling costs as a single owner. Married couples can deduct $500,000 from home selling costs. To qualify, you must have lived there for at least two of the past five years.
1031 Exchange for Investment Properties
If the property is an investment, you can defer home selling costs using a 1031 Exchange. Reinvesting profits into a similar property delays tax obligations and manages home selling costs.
The new property must be similar, used for the same purpose, and have a purchase price equal to or greater than the sold property. Reinvest within a specific timeframe to continue deferring home selling costs.
You only pay capital gains tax and home selling costs when you sell the last property without reinvesting.
Conclusion
Selling a home involves many costs, but understanding home selling costs can help you save money.
Stay tuned to my channels for more in-depth discussions on home selling costs, the 1031 Exchange, and other real estate insights.
See more:
👉 Frequently Asked Questions For Selling, Buying, Investing And Mortgages: https://www.danguard.com/faq/
👉 How much does it cost to sell a house? https://www.experian.com/blogs/ask-experian/cost-of-selling-house/
👉 Visit Tiktok to see more: Low income people can buy a home with 1% down payment now https://www.tiktok.com/@victoriamaidang/video/7363999038389210399?is_from_webapp=1&sender_device=pc&web_id=7363625605076928032
👉 Eye-opening Astonishing story of a High-Tech Wire Transfer Scam https://fb.watch/sYVBfTjhQ5/
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