When selling a house, one thing to consider is the capital gains tax. Capital gains is the profit you make from selling a home. If you haven’t lived in your house for two years, you will have to pay the capital gains tax on the sale of your house which is anywhere from 0%-20% depending on the sale price of your home.
We have witnessed numerous people be within one month of the capital gains cutoff but still go through with the closing because they were unaware of the capital gains rule and their real estate agent never asked the simple question, “how long have you lived in your house?”
Even though the closing attorney is aware of this, he actually represents the buyer during the closing process, therefore will not stop a closing to inform the seller to wait a few more days for the capital gains tax to pass.
The capital gains tax is a very simple concept, however failure to adhere or be aware of the capital gains rule could end up costing sellers thousands of dollars of profit they could have had from the sale of their house.