Expert: Ray Beggs - 4/16/2007

Question
i am a first time buyer and want to put up my house after only being here for a year..how does the recapture tax and other tax penalties work and have you ever heard of anyone selling after being on the property for only a year..im on a 30 year fixed rate with KHC and have been making payments on time..bought the house for 95k and want to sell it for 110k ..i put hardwood floors in it comes with ADT privacy fence and gate off street parking appliances and home warranty and the house is in perfect condition specially the roof the inspector couln't find anything wrong with the house..i love the house but i feel secluded i thought that i would like to live in an erea that feels like the country but im starting to feel lonely out here friends barely visit because i live so far out..it's in a great neighborhood but i want to find something closer to friends and family...

Answer
Hello,

Well, I'm not a tax expert so I'll have to refer you to an accountant for the tax questions but I can tell you that there are many people who sell their homes after a short period of time after buying them. Your lender won't care about it as long as they get their money back, which they will when you sell.

You will have capital gains tax on whatever profit you'll make from the sale. You will also have selling fees. (Agents, escrow, title, recording fees, etc.) You should also check with your current lender and ask if there are any penalties (called prepayment penalties) for paying your loan off early.

Best of luck,

Ray