First-time home seller, here. I’m planning on selling my house in the next couple months. We’re going to use the profits from the sales to pay off debt and make a down payment on our next house. Do the profits from house #1 go directly into my bank account at the conclusion of the sale so that I can choose how to use them myself, or do they go into some kind of escrow account where the bank holds the money? I just want to know so that I can plan accordingly for debt payments and moving expenses, and such. Thanks in advance.
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Man, a lot of odd info here and confusing use of terminology by you and others that could really lead you down the wrong road.
First, let’s differentiate between profit and proceeds. The proceeds will be what you receive at closing. The sale price of the house less closing costs and mortgage payoff. This will be deposited into your bank account. It’s yours to use however you want. Your PROFIT is essentially the difference between purchase price plus improvements less sale price. Depending on those variables you may or may not have any profit.
Some people are straying into the question of taxes. Assuming this is your primary residence and you’ve lived in it for 2 of the last 5 years then you are exempt from tax on your profit (known in this case as Capital Gain) up to a certain limit. If you’re single then $250k of gain/profit is excluded from taxation. If you’re married, the exclusion is $500k.
There is no longer any incentive to roll the profit into a new property. That only applies to investment properties and is a whole other conversation.
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