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| *Ostroff, Fair and Company>>>Renting & Real Estate |
How long do you need to live in a house to make it a good investment? |
Why do they say 5 years? because the equity must grow for 5 years to cover your closing fees and expenses of relisting and reselling the property it depends on if the house is brand new.if the house is brand new i would wait for about 2 years because the house still shifts. if the house is at least 5 years old then look at getting it appraised. the reason why they saw five years is because the house has settled. It depends on what you paid for it verses what it's worth right now. If you got a good deal, it could turn a profit immediately but in order to avoid capital gains taxes, you must live in it 2 years of more. That really depends on the area you live in, the economy and a lot of other factors. In some areas houses value goes down due to certain cercumstances. First of all take what you purchased the property for lets say example: $178,000.00 Look around your area find houses for sale and find out how much they are listed for, make sure they are similar to yours with same # bedrooms, sq feet, land and extra. Ask a realtor what houses have sold recently you can tell them your intrested in selling even if your not, once you find out that information you can get a genertal idea of what you could sell your house for. Also you can contact your local county assesors office to have your property value determined, however this may increase your propert taxes if your state has them. Lets just example say similar houses around your area have sold for $225,000 in a year after you bought your house, you would detuct your payments, (not including intrest) on the loan from your purchase price called (equity) lets just say you paid $500.00 per month without intrest for 1 year (6,000.00) So you still owe 172,000 on your home but you can sell it for around 215,000, you would make a 43,000 profit from your investment, the longer you make payments the more equity you build into your property, so if every year the cost of homes whent up in your area lets say after 3 years you could list your house at 315,000, and you have paid 18,000, you would owe 160,000, a profit of $155,000 thats how it works so the longer you keep your house and make your payments the more equity you built and the more profit you make based on the facts that the cost of housing goes up, if in my example the cost of houses stayed the same your profits would be less. Talk to your finance company about it. 2 years and 1 day is the absolute minimum. Why? In the U.S. this is the time required to have all the income you make from the sale TAX FREE. Not tax deferred, not tax reduced but tax free. Section I.R.S. 121 states that if you live in your primary residence for at least 2 years and 1 day you may pocket $500,000 in gains if you're married, $250,000 in gains if you're single in NET PROFITS. Hope this helps. Terry S. http://www.Welcome2Arizona.com |
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