Selling a Home in First Two Years

If you sell your house in the first two years, there are some things you should consider:

Did you get a "forgivable" loan or anything similar for help with your down payment? If so, some of that may be required for repayment on a pro-rated basis.

Do you have a pre-payment penalty on your loan? If so, you might have to pay the penalty out of your proceeds (if there is enough money.) Read your original loan papers and/or call your mortgage lender to find out.

One bad thing about selling before two years is that you might not have had time to gain a lot of equity. If you're selling through a Realtor, make sure they give you a breakdown of all fees, including commissions, and show you what you'll net after all is said and done. You don't want to end up owing! I've seen sellers have to bring money to closing.

Another negative is that you might not be able to use the $250,000 capital gains exclusion for selling your primary residence if you aren't in the home for two years or more. (Check with your tax accountant for details on that issue, because I'm not a tax advisor.)

Good luck!

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