A job transfer, a new family member or a change in needs; many reasons may lead to buying a home and selling another. In either case, we must take into account some significant aspects and recommendations so that the real estate operation is worthwhile.
Recommendations for buying a home and selling another
1. Analyze the market
First, it is convenient to know the real estate market in the area where we'll sell the property. That will give us knowledge of the potential profit of the house sale, and it will allow us to establish our goals and needs in the purchasing of a new property.
At the same time, it is essential to analyze prices in the areas where we are looking for a new home. Thus, we'll determine whether or not to apply for funding. Also, it will be useful to decide the location of the new house.
2. Calculate additional expenses
Setting a budget for your new home purchase is fundamental. For this, we must have in mind the potential profit of selling the old one. However, to avoid financial risks, it is necessary to consider some additional expenses derived from buying a home and sell another:
• Tax on property transfers: the amount may vary from one region to another.
• Capital gains: a tax that is calculated based on the capital gain obtained from the sale.
• VAT: its percentage varies according to the region and whether it is a brand new property or not.
• Expenses derived from the mortgage settlement or opening of a new one.
• Notary fees.
These are expenses that cannot be assessed a priori before selling a home and buying another. Still, we should make a rough estimation to include them in the budget.
3. Logical order
The reasonable thing to do is to sell first to reinvest in a new home after. Both operations, sale and purchase, are complex and need their time, so we don't need to do them at the same time.
Once we have reached a sale agreement, we should set a time frame with the buyer to leave the house. It should be brief but sufficient to find a new home and put it up.
By selling first, you get the necessary funding for the purchase of the new housing and pay off the old mortgage, if any, or negotiate a mortgage bridge loan with the bank.
After the sale of the house, we must take into account the necessity or not of requesting a mortgage and negotiate with the bank the best options.
One last significant aspect: in the personal income tax, it is necessary to declare the capital gain obtained from the sale of the old home, if there was one. However, there are exemptions when it comes to reinvestment in habitual residence, and we carry out the operation within less than two years from the sale.
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