You can sell at any time, but it's smart to wait at least two years before selling. When reselling your home, some real estate experts recommend the 5-year rule. This unofficial rule states that you must stay in your home for at least 5 years for it to make financial sense to sell your home. Not everyone will break even in 5 years, so the 5-year rule doesn't always apply, but for the most part, it's a good general rule to follow.
To exclude your capital gain, you must have owned and used your home as your primary residence for two of the last five years prior to the sale. This means that if you buy and sell in less than two years or if you use it as a vacation, you will receive a capital gains tax. Sometimes it's possible to make a profit even if you sell before your area's breakeven horizon. However, you can offset your tax bill by selling with a low-cost brokerage agency and saving thousands of dollars in commissions.
Some lenders charge a prepayment penalty if you sell your home within a certain period of time after the purchase. There are many personal, professional, and financial reasons that can lead you to sell your home soon after you buy it. If you're in a higher tax bracket and expect to make a significant profit, the difference between selling your home within six months of buying and delaying the sale until after the one-year mark could be tens of thousands of dollars. Homeowners can also sell soon after buying if they decide that the home they purchased is too big or too small for their needs.
There can be several reasons why a homeowner may need or want to sell their home soon after buying it. After all, real estate is a classic example of a “buy low, sell high” investment: you don't want to make a purchase if prices are likely to fall, not rise in the future. If you don't make enough money from the sale, you may have to pay some out-of-pocket costs, which would mean you would actually lose money selling your house. You'll want to consider each of them to minimize your chances of losing money and maximize your chances of making a profit when you buy and sell your home within certain time frames.
With these and other factors in mind, you'll want to do some numbers and see how long it makes sense to stay in your home before selling. By subtracting the estimated closing costs from the projected sales price, you can get a good idea of how much money you'll have to make when it's time to sell. But what if you just bought a house and you already need to sell it? Life happens, and sometimes unexpected events can bring you back to the closing table after just a few months.
