Today we are going to talk more about the seller of the home. What happens after you accept an offer, closing, taxes, etc. What the buyer must do once the seller accepts the off on the home. The seller may have repairs to perform if any are fond by the Inspector. There are so many things to do to close you might get overwhelmed. Take a minute and print off a seller’s checklist so you know where to go from here.
Make sure that you keep all of the closing papers together. These papers may come in handy if an unpaid bill comes into question. Also damages or defects the buyer finds may under scrutiny. You will need these papers if a lawsuit is brought into play. Keep all paperwork related to closing, improvements and prior purchases made will you owned the property. You may also need them for tax time.
Once all of your belongings are moved out, Clean the house. If able you can have a professional crew come in to do the cleaning. It is called a move-out clean and costs somewhere between two to five hundred. If you had it cleaned before listing it you might be able to do it yourself. Things to remember, you want to leave the house as clean as you want yours. This means wiping out cabinets, vacuuming or shampooing carpets, cleaning the bathrooms. On moving day no one should have to clean a home before they can move in their furniture.
If it is going to be a while before the new owners move in, turn off the water so that little drips don’t turn into big problems. Leave a note that you have turned the water off so they don’t have a plumbers bill. Make sure you have called the water company, light company, garbage company, and insurance company once you the home has officially been deeded to the buyers. Attend the final walk-thru so that you can answer any questions the buyer may have. Such as how to clean the pool, where all the shut-offs are for the water and electric, or how to operate the security system. Leaving the new owners telephone numbers to all utilities would save them time and remind you to cancel everything. Take a last look around the house make sure you didn’t leave anything, pull the drapes, shutters, or blinds, and lock the door when you leave. This will reduce the chance of a break-in.
Closing day is a day full of excitement. It sometimes is called Settlement this is when all of the money has gone to pay off any mortgages, lenders, lien holders, and service providers. The closing will take place in the office of the person you hired to administer the closing, in my case, it was at a Lawyer’s office. The sale if final when the transaction has been recorded by the clerk of deeds. The closing costs in today’s time range from fifteen hundred to three thousand.
A Capital Gains Tax Exclusion and Other Deductions
Homeowners should be familiar with all the tax breaks offered by the IRS. Mortgage interest and property tax deductions are a couple. The home seller also may have a tax break if the sell their home for less than 250,000 in profit, 500,000 if they are married. This is called a capital gains exclusion. Capital gains tax is a tax imposed on the profit (capital gains) from the sale of a property. To calculate capital gain, subtract the purchase price from the sales price. Taxpayer Relief Act of 1997 became law, the home-sale tax helped millions of residential taxpayers. The once-in-a-lifetime options were replaced with the current per-sale exclusions. There is no limit on the number of times you can use the exemption and there is no rule you have to buy another home. There are some rules you must follow:
- The property you’re selling must be your primary residence
- You must live in the house for two to five years prior to selling
- Both spouses must pass the eligibility rules
- Members of active military are exempt from the live in rule
Make sure that you know what deductions you can take on the property you are selling. You may want to look into these:
- Your real estate agent’s commission
- Legal fees
- Title insurance
- Inspection fees
- Advertising costs
- Escrow fees
- Legal fees
You may also be able to do a partial exclusion if your situation changes. These can be a divorce, change in employment, change in health, or other unforeseen circumstances. Moving expenses may also be deductible if you are moving because of work. These may include transportation costs, travel to the new place, storage costs, and lodging costs. You can also have a deduction for the amount of time you lived in the home before its closing. *Any home improvements made ninety days before the sale of the property can be deducted as they are considered selling costs. The mortgage points you paid to lower your interest rate if you refinanced your home may also qualify, you can deduct a share of the points until that loan is paid, when you pay off your loan by a sale, you can deduct what remains as the value of those points.
The bottom line is keep all receipts and paperwork. Make an appointment with a tax professional to see what deductions can be taken. Deductions vary both by year and by state. Your tax man will know which ones are available when you file.