As of 2024, the average American homeowner stays in their property for about 11.9 years, according to ConsumerAffairs.com. Many individuals move due to a desire to own a larger or new home, or because of changes in family or employment. But what if you’re not willing to wait that long before selling? Is there a recommended timeline for how long you should stay in your home before deciding to sell?
In this guide, the experts at The Schneider Group will address these questions and offer helpful home-selling tips, along with real estate advice to navigate the market in Chicago.
How Long Should You Stay in a House Before Selling?
There is no legal requirement for homeowners to stay in a property for a specific period before selling, so you can sell immediately after closing or even if you’ve inherited a fully paid-off home. However, it’s generally recommended to stay in a home for at least two to five years before selling. This timeframe is suggested for various reasons, which we’ll explore further.
Reducing Long-Term Capital Gains Tax
Capital gains tax on real estate is a federal tax imposed on the profit from the sale of your primary residence. To minimize or avoid this tax, you must have lived in the property for at least two years and used it as your main home for two out of the five years before the sale. The IRS allows single filers to exclude up to $250,000 of the profit, while married couples filing jointly can exclude up to $500,000. This tax exclusion can be a valuable advantage for homeowners who meet the criteria.
Building More Home Equity
Home equity represents the value of your home that you own outright, calculated by subtracting your remaining mortgage balance from the current market value of the property. For example, if your home is valued at $300,000 and you owe $200,000 on your mortgage, your equity would be $100,000.
The longer you stay in your home, the more equity you can build, as part of your mortgage payments goes toward reducing the principal balance. Additionally, home improvements and property value appreciation can further increase your equity.
Building equity before selling is important because it helps maximize the amount of money you retain after paying off your mortgage when the sale is completed.
Understanding Your Mortgage Loan’s Pre-Payment Penalty Policy
One reason for the suggested home selling timeline of two to five years is to allow time to prepare for various costs associated with the sale. These expenses include real estate commissions, title insurance, recording and settlement fees, prorated property taxes, escrow and wire transfers, legal fees (if a real estate lawyer is hired), and moving costs. Depending on the condition of the home, additional repairs may be necessary before selling. Other costs could include a home inspection to identify issues and home staging to make the property more appealing to buyers. These expenses can quickly add up to thousands of dollars, making it more challenging to handle financially if you sell too soon after purchasing.
Focus on Completing Only Essential Home Repairs or Maintenance
Before selling a home, it’s essential to address necessary repairs and maintenance to ensure both safety and habitability. Neglecting these issues can lower your home’s sale price and even deter potential buyers. Plumbing leaks, for instance, can cause significant water damage and encourage mold growth, so it’s crucial to have them fixed promptly by a licensed plumber.
Roof leaks should also be prioritized, as they can lead to water damage and mold growth. Having a licensed roofer inspect and repair any leaks is necessary to avoid bigger problems when the next storm hits.
Another key issue to address is clogged or deteriorating gutters. Unkempt gutters can attract pests such as mosquitoes, roaches, and rodents, and can also lead to water and mold damage. Cleaning and repairing the gutters not only prevents these issues but also boosts curb appeal.
Electrical problems are another safety concern, especially in older homes. Defective electrical systems can result in dangerous situations like electrocution, burns, or fires. It’s recommended to have an electrician inspect the system and ensure it is up to code before selling.
Lastly, deep cleaning the home is essential for creating a welcoming atmosphere. A cluttered, dirty house can make it difficult for buyers to imagine themselves living in the space. Taking the time to clean the house or hiring professional cleaners will help showcase the home in the best possible light.
Explore the Option of Renting Out Your Home
Instead of selling your home, you might consider renting it out and using the rental income to cover your mortgage payments. This can be a viable option if you need to move but want to keep the property. However, it’s important to be familiar with and adhere to the local landlord-tenant regulations in Chicago.
Alternatively, you could hire a professional property management company to handle the responsibilities of being a landlord. They can assist with marketing, tenant placement, rent collection, and property maintenance. In exchange, they typically charge a percentage of your monthly rental income, such as 10%, meaning you’d pay around $100 on a $1,000 rental fee.
Consider Renting Your Next Home While You Save
If you don’t have enough funds to purchase a new home right away, renting a property could be a good temporary solution until you can save up. In Chicago, rental prices are reasonably priced, falling somewhere in the middle range—neither overly expensive nor particularly cheap.
Consider Selling to a Cash Home Buyer for a Quick and Easy Transaction
If you need to sell your home quickly and want a simple process, working with a cash home buyer might be the best option. Cash home buyers, such as The Schneider Group, offer fast cash deals and purchase homes as-is, meaning you don’t need to worry about repairs or renovations. Whether your house is in great shape or needs work, you can expect a fair cash offer regardless of its condition. One of the main advantages of working with a cash buyer is that they don’t rely on financing, reducing the risk of the sale falling through. Unlike traditional sales that involve agent commissions, The Schneider Group doesn’t charge fees, saving you money. Plus, the process is quick—after providing basic information about your property, you’ll receive a cash offer and can close the deal in just a few days. This makes it one of the fastest and most straightforward ways to sell your home and move on with your life.
Ready to Sell Your Home? Let’s Make It Happen!
The general recommendation for how long to live in a home before selling is two to five years. This timeline helps minimize capital gains tax, build equity, and avoid mortgage pre-payment penalties. However, if you need to sell sooner, it is legally possible to do so. If you’re looking to sell quickly in Chicago, The Schneider Group can assist. Contact us today for a no-obligation cash offer!
Ready to sell your home quickly and hassle-free? Contact The Schneider Group today to receive your no-obligation cash offer and experience a fast, fair, and stress-free sale! Let us help you move on with confidence.
Contact The Schneider Group at 847.347.6288