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Actually we bought new. It's a new construction townhome. It's already appreciated a decent amount because of our location (Nashville) and the crazy rising housing market. However, the tricky part of this is because we're first time home buyers and we used a thda loan, the gov't loaned us about $8300 (interest free), so unless we completely pay the loan off, we will have to pay back the ~$8300 when we sell the house. That adds a layer of complexity.
WOW, you have to pay off the loan in order to NOT pay it back. That was a bad deal IMO. Here, programs like that require you to occupy the home for 5 years and then it's forgiven. Anyway, since it's a townhome I doubt you will live there till it's paid off. Of course I don't know your financially situation either. If you need to move, then you need to move. But you will pay capital gains tax within 2 years. No way to avoid that! Depending on what you could sell it for yo may still come out ahead. You would need to talk to a realtor and a tax accountant.
Actually we bought new. It's a new construction townhome. It's already appreciated a decent amount because of our location (Nashville) and the crazy rising housing market. However, the tricky part of this is because we're first time home buyers and we used a thda loan, the gov't loaned us about $8300 (interest free), so unless we completely pay the loan off, we will have to pay back the ~$8300 when we sell the house. That adds a layer of complexity.
Actually, I knowill someone who has one of these grants and the recapture is nine years. I'd STRONGLY suggest you review your documents.
As far as taxes go, if you sell your primary residence within one year of closing, any gain is taxed as normal income. Sell in second year, capital gains. Sell after 2 years of home ownership, no tax up to the exclusion amounts of $250000/ $500000.
WOW, you have to pay off the loan in order to NOT pay it back. That was a bad deal IMO. Here, programs like that require you to occupy the home for 5 years and then it's forgiven. Anyway, since it's a townhome I doubt you will live there till it's paid off. Of course I don't know your financially situation either. If you need to move, then you need to move. But you will pay capital gains tax within 2 years. No way to avoid that! Depending on what you could sell it for yo may still come out ahead. You would need to talk to a realtor and a tax accountant.
Actually, if they have a gain, there IS a way to avoid capital gains tax if they move within 2 years.
People tend to focus on the 2-year requirement and don't seem to know about other aspects of the law.
HINT: There are prorated exclusions that may apply.
I just want to point out that if you get a traditional mortgage with the 10-20% downpayment, the first ten years or so of your mortgage is probably 90% paying interest.
Actually we bought new. It's a new construction townhome. It's already appreciated a decent amount because of our location (Nashville) and the crazy rising housing market. However, the tricky part of this is because we're first time home buyers and we used a thda loan, the gov't loaned us about $8300 (interest free), so unless we completely pay the loan off, we will have to pay back the ~$8300 when we sell the house. That adds a layer of complexity.
So in order to break even, you would need to sell the townhouse for whatever your loan payoff amount is (which won't be your balance) + realtor commission of (probably) at least 6% + closing costs + $8.3K. The question is, has your townhouse appreciated that much? What avenues have you used to determine its current value? (Please, please, please don't say Zestimate!)
WOW, you have to pay off the loan in order to NOT pay it back. That was a bad deal IMO. Here, programs like that require you to occupy the home for 5 years and then it's forgiven. Anyway, since it's a townhome I doubt you will live there till it's paid off. Of course I don't know your financially situation either. If you need to move, then you need to move. But you will pay capital gains tax within 2 years. No way to avoid that! Depending on what you could sell it for yo may still come out ahead. You would need to talk to a realtor and a tax accountant.
Not a terrible deal I think. We didn't pay any closing costs. We actually made about 3k when we closed. That was the upside. Plus the Nashville housing market is blowing up and it can be very difficult to get into the game if you don't have tons of cash to put down on a house.
Quote:
Originally Posted by C24L
I would want to live in the house for at least 5 years before I moved again.
I doubt we'll still be here in 5 years because I'm sure we'll have out grown this space by then.
Quote:
Originally Posted by merewenc
So in order to break even, you would need to sell the townhouse for whatever your loan payoff amount is (which won't be your balance) + realtor commission of (probably) at least 6% + closing costs + $8.3K. The question is, has your townhouse appreciated that much? What avenues have you used to determine its current value? (Please, please, please don't say Zestimate!)
It probably hasn't appreciated that much yet, but my goal is to wait two years then re-assess. My hope is by then, it will. The market here shows no indication that within the next few years it will slow down regarding housing appreciation. I highly doubt we'd move before two years simply because of the costs involved with that.
in ten years we will sell our house and move to our retirement home we know we are not going to live in this house for retirement and at least when you buy you can get money back to put down on something else or pay it off completely depending on what you buy ...You should at least stay 5 yrs in a house to gain some money back indeed .
I just want to point out that if you get a traditional mortgage with the 10-20% downpayment, the first ten years or so of your mortgage is probably 90% paying interest.
Ugh.
1) It would take an interest rate of about 11% on a 30 year note for that to be the case (somewhere around 1990/91 would be about the last time they were that high)
2) The more important part is how much you pay for the money borrowed
For every 100k at 11% on a 30 year loan
first 10 years = $10,750 of the $11,883 in payments is interest
For every 100k at 4% on a 30 year loan
first 10 years = $3,206 of the $5,728 in payments is interest
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