There are many hidden fees related to the cost of selling a house. In this article, I provide crucial information that can help you save both time and money.
Revealing 7 Hidden Fees Involved In The Cost Of Selling A House
To sell real estate, you will have to pay 5% to 10% of the sale price in various fees. Specifically, if you sell a house worth $800,000, the cost ranges from $40,000 to $80,000. Below is an overview of these types of costs.
Agent Commission
Agent Commission forms a key part of the cost of selling a house. It ranges from 3% to 6% of the selling price. Full service can raise the fee to 5% to 6%. Partial service reduces it to 2% – 3%.
Home Prepare & Moving Costs
When selling real estate, you must repair and decorate your home. This includes painting walls, cutting grass, and buying ornamental plants. Hiring an interior decoration company and cleaning services are also essential. These efforts enhance the appeal of “Open House” sessions and contribute to the cost of selling a house.
Closing Cost
Closing costs, part of the cost of selling a house, range from 1% to 3% of the sale price. These fees cover Escrow and Title, ensuring legal procedures and home payment compliance.
Legal Fee
Depending on the state regulations, legal fees are required to pay to attorneys for legal advice. This expense is also part of the cost of selling a house.
Understanding the cost of selling a house will help you avoid losing money unfairly.
HOA Fees
If the property is a condo or townhouse, you must pay costs related to preparing and verifying HOA documents. These also include transfer fees, adding to the cost of selling a house.
Property Tax
If it’s time to pay property taxes, the seller must pay the full amount upfront. This cost is then reimbursed by the buyer through escrow, contributing to the overall cost of selling a house.
Capital Gain
If the sale results in a profit, another cost of selling a house involved is the capital gains tax. This tax rate varies from 20% to 30% depending on the state.
Minimizing The Cost Of Selling A House Like An Expert Here
To maximize profit from the cost of selling a house, utilize available policies. Explore expert methods to reduce capital gains tax.
Keep Home Repair Bills
The cost of selling a house allows deductions for home repairs during ownership. Therefore, carefully keeping repair receipts is essential.
Repair and renovation receipts can significantly reduce the cost of selling a house
Apply Tax Exemption For Primary Houses
If you sell a primary home, the cost of selling a house allows a $250,000 profit exclusion. If you are married, this exclusion increases to $500,000. The condition is that you must have lived in the home for at least two years within the last five years.
For example, if the house is sold in 2024. To qualify, you must have lived in the home for at least two years between 2019 and 2024. If you owned it for only one year and lived there full-time, you would not qualify for the exclusion.
Apply 1031 Exchange Law
For example, if you sell Investment Property A for $1,000,000. After deducting the purchase price and expenses, your profit is $200,000. Without reinvestment, you must pay tax on this amount as part of the cost of selling a house.
However, if you buy Property B for $1,000,000 or more, the capital gains tax on Property A is deferred. This can significantly reduce the cost of selling a house. You only pay the deferred tax when you sell Property B and calculate its profit. If you keep reinvesting, the tax continues to be deferred until the final property sale.
To qualify, you must reinvest in a property with the same purpose, such as residential use. Additionally, the sale and purchase must be completed within a specified time frame. This process, known as a “1031 exchange,” will be explained further on my channel (www.danguard.com). Stay tuned for more details!
Conclusion
Selling a house can be expensive, but understanding the cost of selling a house helps avoid unnecessary expenses.
Read more:
👉 Frequently Asked Questions For Selling, Buying, Investing And Mortgages: https://www.danguard.com/faq/
👉 Closing Costs Explained: What Are Closing Costs and How Much Are They?: https://www.zillow.com/learn/closing-costs/
👉 Visit our Tiktok channel: Essential Property Documents You Must Know https://www.tiktok.com/@victoriamaidang/video/7446237965115821343
👉 Revealing the Secrets of 3% Commissions for Real Estate Agent https://youtu.be/L6f4nWXm8yc?feature=shared
👉 Think You’re Too Experienced to Get Scammed? Think Again! https://fb.watch/w-eM0xrt8k/
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