Home Selling in Portland>Question Details

Bart Betz, Other/Just Looking in Portland, OR

After the home sale...what happens to the cash?

Asked by Bart Betz, Portland, OR Mon Jun 17, 2013

What happens when you complete your home sale, but are unable to find another property that satisfies your requirements? I'm specifically asking about the proceeds from the sale. If i'm unable to find something I really want to live in for years to come, I've decided to rent and continue looking. I lived in my home for almost 10 years, so I'm not expecting to pay any capital gains taxes

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Don't gamble with it and resist the temptations to spending it. Invest it somewhere safe and liquid as this is your home equity and hard to replace. Keeping it somewhat liquid will give you the flexibility to buy a home whenever the timing is right. Remember, having the cash to acquire a good conventional loan later will save you a lot of money in interest and mortgage insurance.
0 votes Thank Flag Link Sat Mar 1, 2014
If there isn't another sale tied to your transaction, lean holders get paid first and the balance comes to you in the form of a nice fat check written to you from the title company.

Simple as that.
0 votes Thank Flag Link Mon Jun 17, 2013
Just a thought, but maybe you'd like to use your money to buy investment property, like a beach house, for example which could be a vacation rental. Check with your accountant or financial advisor, but this might be a good way to grow your cash into an effective retirement plan.
0 votes Thank Flag Link Mon Jun 17, 2013
You can hold on to the cash and buy when you are ready. Your biggest situation to deal with will be taxes...you need to ask your tax preparer specifically about that issue.
0 votes Thank Flag Link Mon Jun 17, 2013
You sold the property and the proceeds minus any mortgage balance owed and selling costs are yours to keep wherever you want to keep them. I am not taking into consideration any possible taxes due; others have already pointed out your exclusions. I am also assuming this is not an exchange but a regular sale.
As for myself, I would have that money in a special account, ready to submit proof of funds with my offer when I find that new property. Depending on how long in your estimation that will take you should invest your money commensurate to have liquidity and access when needed.
0 votes Thank Flag Link Mon Jun 17, 2013
Many home buyers have encountered problems finding homes due to low inventory.
ALL buyers have access to multiple listed properties. You have to compete with many dozens of other buyers.
BUT....did you know that there are a lot of people who want to sell their homes and are not yet listed for sale? If you hire an agressive buyers agent who cold calls sellers,, you might just be able to find the perfect, non-listed home and beat the competition...Contact me and I will explain how this can be done.
0 votes Thank Flag Link Mon Jun 17, 2013
If you are single you have a $250,000 profit exemption and $500,000 profit exemption, if married when selling a home you have lived in 2 out of the past 5 years. In most cases if you don't buy there is not a re-investment penalty. Talk to an accountant. With rates as low as they have been in the past year a 50 year low I would try and buy something even if it is not perfect. Rates will go up and that is a hedge if you buy now and wait a few years to find something because rent in most areas will be similar to payments so it is better to buy then be locked into a 1 or 2 year lease. Good luck to you. Tom Inglesby, Broker
0 votes Thank Flag Link Mon Jun 17, 2013
Your accountant can help you answer any financial questions regarding taxes, but a good do it yourself resource is http://www.irs.gov. There is a lot of good information, including this:

If you have a gain from the sale of your main home, you may be able to exclude up to $250,000 of the gain from your income ($500,000 on a joint return in most cases).

- If you can exclude all of the gain, you do not need to report the sale on your tax return.

Congratulations on the Sale.
0 votes Thank Flag Link Mon Jun 17, 2013
I would recommend talking with a financial planner. Your title company will deliver your funds usually by check or they can deposit into your bank account.
0 votes Thank Flag Link Mon Jun 17, 2013
Hi Bart
That's a great question.

According to Turbotax, here's the lowdown on tax consequences of selling your home and not re-investing immediately:

"If you live in a house for two of the previous five years, you owe little or no taxes on its sale. Knowing the tax laws can make a considerable difference in the tax picture when you sell a building, whether it?s your residence or a property that was previously your residence."

That being said, there are limits to the profit that is not taxable.

Oregon tax laws follow federal tax laws with regard to property sales, so because I am not a tax advisor, I would recommend that you contact a CPA to make sure that you are getting the best advice that applies to your personal situation.

If you would like help with your home search, of course, I'd be happy to help you so you don't have to concern yourself with tax consequences.

Shelby Bateson
Broker at Knipe Realty NW
503-819-6545
0 votes Thank Flag Link Mon Jun 17, 2013
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