Have you sold a house/moved when you didn't have to?

IBackBevo

If so, I need advice on how/why you made the decision...

We own a home we purchased after the market crashed in 2008.  Here is the deal - we live nearby where they are building this huge new Exxon headquarters and the real estate market is going crazy right now. 

So we are wondering if we should sell.  My main reason for wanting to sell is that the house is not very baby friendly. It has a pool.  It has multiple porches that are off the ground.  Also, it is an older home and needs some work and, quite frankly, I don't really want to sink a bunch of money into it.  Also, it is on almost 2 acres with a bunch of flower beds so the yard requires a good amount of upkeep (we pay someone to do this) and we also have to pay someone to keep the pool. And we almost never use the pool.  Also, the school district isn't great...which is good for the property tax rate (super low), but will be bad in about 5 years when LO starts school...if we even put him in public school.

The house appraised in 2010 for about $180k more than what we paid for it in 2008. I think the 2010 appraisal overvalued the home, though. An agent I've talked to seem to think we could probably get $80k-100k more than what we paid for it.  I don't know about that, though. Regardless, I think we could sell it for more than what we have into it.

But her is my main pause -  I have no idea where we would move!!!  When I look at all the houses for sale in the area that cost what we have left owed on this house, we would be downsizing significantly.  I would generally be on a tiny lot and in a house significantly smaller.  We could get a more expensive home, but I don't really want to do that.  We could rent temporarily, but I think we need to buy within two years (correct me if I'm wrong) or pay taxes on what we make off the old home.

So I feel torn. Any thoughts? If you have sold a home before when you didn't have to, what made you decide to take the leap?

mrskelly731

DH and I are on the fence about what we want to do.  We bought our home as a short sale in 2009.  It's a nice house, and it's been a great first home but we do not want to live here (locally) forever.  Across the street the family put their house on the market for an insane price.  About 100K more than I'd think they should.  If they get anything near that we are absolutely selling our house.  When we sell we will either rent locally to save money for more of a down payment on a next house until DH finds a job elsewhere, or move elsewhere meaning - DH found a job worth moving for.  I'd say you don't sound completely happy where you are at and I'd be more inclined to tell you to sell and just rent until you find something you are happy with.  I have no idea about the tax situation.  I do believe you get hit hard if you sell your home within two years of buying it, but you are clear of that.  GL with your decision.

SunAndRain

If you love the location and the house has good "bones" then I would put the 5 figures it would cost to sell and move in to upgrades and make the interior and exterior in to something you truely love.

Also, a pool doesn't make a home not baby friendly.  Stick a fence around it.  Of course not everyone wants a pool given the upkeep so go ahead and fill it in if you never use it.

E&RMommy

The market here is great for selling now but not for buying.  So even though you'll do great on the selling end, you might not get such a great deal on other side.  Something to keep in mind.

The interest rates are insanely low though which is a consideration if you haven't refinanced.

It's a tough one for sure.

We lost $50k last year and took almost a year from 2011-2012 to sell our house in Fall Creek.  It sucks.  The market is so different this year - it's hot hot hot.  On the flip side, we built our new house and get instant equity when the prices sky rocketed.

It's not always sweet on both sides of the deal.

I'd look at schools unless you guys are planning private.  I'd keep the big yard and pool - will be more important when the baby is just a little older.

Lanajax319

Based on what you described, I wouldn't sell it. It sounds like a good house and a great lot. I agree with one of the pp's take the money you would be using to move and use it to remodel or baby proof your current home.

LittleFish1

Just a few points to consider going off of your details....

1. Schools do change with changes in the demographics. Takes time, but can happen (unless all of the people buying up property will be sending their LOs to private schools)

2. Ask your tax person about how the capital gains taxes would work.

3. Mortage interest rates have increased so you may not get a better rate than you have on the current loan.

4. The real estate agents will take their cut of any sale so you won't see the full value increase for your pocket.

IBackBevo

Thanks for the suggestions/things to think about/insights. 

The vast majority of people in my area (at least my immediate area) who are homeowners send their kids to private schools if they have school aged children. If we stayed in our current home, we would definitely put our son in private school. If we moved, it would likely depend on where we moved to. 

As for the tax situation, it is my understanding that if you sell your home you have to buy another home within two years or pay capital gains tax on any profit.

We have sold a home before (when we moved for jobs) so I am aware of realtor fees, etc.

I don't know what we are going to do yet.  It is a lot to think about it...

Mustardseed2007

It sounds like we may live in the same city. I work with a few commercial real estate brokers on a lot of deals for work. I've heard from a couple of them that the area in our city where Exxon is building has driven the market up for both residential and commercial real estate. Even if we're not in the same city, it sounds like the same situation. If I were in your shoes and I didn't love the schools in your area and you don't love your house I would look around for better public schools and buy in that neighborhood. You can always still send your child to private school but at least you'll have a choice. Plus, good schools = good neighborhoods a lot of the time. 

ccam

I used to do taxes and from what I remember - as long as you owned and used your home as your main home for at least 2 of the 5 years prior to selling, you can exclude up to a $500,000 gain on the sale of your home (joint tax return).  Unless there are some new rules, I don't remember anything about having to buy a home in the next 2 years.  Did you have some sort of first time homebuyers tax credit in 2008?  Maybe there is something with paying that back if you move??

We took a leap last year and put our house on the market.  We didn't think it would sell as fast as it would, but it was sold in about a month.  We ended up buying a lot on foreclosure and building new, so it all worked out in a our favor.  We are in a much better school district, which is the reason we wanted to leave where we were before, although our taxes are about double.  But you get what you pay for, in this situation.

kristinc01

ccam:

I used to do taxes and from what I remember - as long as you owned and used your home as your main home for at least 2 of the 5 years prior to selling, you can exclude up to a $500,000 gain on the sale of your home (joint tax return).  Unless there are some new rules, I don't remember anything about having to buy a home in the next 2 years.  Did you have some sort of first time homebuyers tax credit in 2008?  Maybe there is something with paying that back if you move??

We took a leap last year and put our house on the market.  We didn't think it would sell as fast as it would, but it was sold in about a month.  We ended up buying a lot on foreclosure and building new, so it all worked out in a our favor.  We are in a much better school district, which is the reason we wanted to leave where we were before, although our taxes are about double.  But you get what you pay for, in this situation.

 

^^ I'm a CPA and I agree with above.  You shouldn't have to pay any taxes on a sale of your home unless you sell it for a profit of over 500k.  I think your confusing the 2 year rule with like-kind exchange rules that wouldn't be applicable to the sale of a personal residence.  

And as pp suggested you may run into problems if you received the Homebuyer tax credit in 2008.  Details: For example, if you bought a home in 2008 and claimed the maximum credit of $7,500, the repayment amount is $500 per year. If you stop using the home as your main home, generally you must repay the entire remaining amount of the credit for the year the home is no longer your main home. There are some exceptions to this rule. 

Red_Dahlia

Yeah, I've heard the housing market in TW is crazy right now. I've also heard that the energy corridor on I-10 is nuts too - no available homes, people knocking on doors making cash offers on houses that aren't even for sale, etc. It would be great to make some money off of your house - but where would you go? If you bought in the same area, you'd be paying for someone else to make 80-100k on their house. And since the Houston area typically doesn't see this type of growth in values, I'd be concerned that the values will go back down in a year or so and you'd have a loan for more than your (new) house is worth.

I'd say it doesn't hurt to look around and see if you could find a house in a better school district. (although I think your current house sounds fantastic!) If you find something in your price range in a good district, go for it. Are you tied to that area or could you look in Cypress, League City, etc. some of the other nice areas that aren't as "hot" right now?

Also- how do you never use the pool?? If I had a pool, I'd be in it every day.