It’s obvious that buying a home can be expensive, but did you know that selling your home can come with serious costs as well? While some upfront expenses are a matter of choice, many more are important investments in successfully selling — and selling for the highest amount possible. Other costs come at closing and from taxes. The key is to know what to expect and plan ahead. Here are the biggest expenses you can expect.
1. COMMISSION
At closing, you can expect to pay between 5 to 7% of the sale amount in real estate agent commissions. This commission is meant to pay both your agent and the buyer’s agent. Hire a great agent, and you’ll be sure to still earn a huge amount of money in proceeds after paying commission. A successful agent will work hard for you, not settling until they’re sure that the offer they ultimately accept is for the highest possible price and under the best conditions. That’s why it’s crucial to greatly consider who to hire as your realtor!
2. TRANSFER TAX
Many cities and states require the seller to pay transfer taxes. Massachusetts is one of those states. Also referred to as deed stamps or excise taxes, transfer taxes in Greater Boston cost $4.56 per thousand of the purchase price on the deed. If your home sells for $600,000, you can expect to pay $2,736 in taxes up front at closing. You should know that there’s debate among tax professionals as to whether you can write this off as a tax deduction and also that Somerville has recently proposed to change the transfer fee in favor of owner-occupants.
3. CAPITAL GAINS
A capital gain occurs when you sell something for more than you spent to acquire it. Capital gains are included in Massachusetts income, and you’ll have to report a gain from selling or exchanging capital assets on Massachusetts Schedule D. Long term capital gains (for property held more than one year) are taxed at 5.2%. Federal capital gains can range from from 15 to 25%.
FYI — If you do end up earning less than $250,000 on the sale of your primary residence (or $500,000 if you’re married and file taxes jointly) after subtracting costs of preparing the property for sale, you likely won’t have to pay capital gains taxes.
4. MOVING
Roughly half of all people who move use professional movers, whether they’re moving short or long distances. Often overlooked, the cost of hiring movers locally can be as much as $2,000 for a four bedroom house. The cost to move out of state averages about $1,000 per room, with an average cost of 50 cents per pound.
Moving for work? In Massachusetts, you might be able to list reasonable moving expenses as a deduction on your taxes if your new commute will be at least 50 miles farther than old commute.
Planning a move? With tenure and experience coupled with talent and originality, Erica Covelle and her team are top agents offering an exclusive white glove service. We are skilled negotiators who can help you get the best possible terms and price for your property. Call us today at 857.529.SOLD (7653) to learn about SELLING YOUR HOME with COVELLE&CO GREATER BOSTON REAL ESTATE: covelleco.com/contact-us.
