Selling a home for less than you wanted is not the ideal situation but sometimes necessary. To learn whether you should take a loss on your home, read today’s blog and decide what’s best for you.
What You Should Know
Choosing the option of selling a home at a loss does come with a price or lack thereof, meaning, just because you take a loss doesn’t mean there are tax benefits. Also, consider all your options before taking a hit on your home. If you don’t have a choice or keeping the home isn’t worth the headache, consider selling your home for cash.
Evaluate the Market
It’s time to ask yourself if you need to sell now. Many circumstances may prove that it is, but only you can determine that. The main reason for selling a home at a loss is the need for money to buy another home. Evaluate the market and check to see the housing prices. Are they trending upward? If so, maybe you can hold off selling to see if you can get a higher price. Conversely, if the market is going down, it may be best to get what you can out of your home to ensure you don’t take a more extensive loss. Reading about the housing market is a good idea.
As stated above, there is no tax benefit to selling your home for less, but a loss incurred from a rental property sale is deductible. You need to first establish the home as a rental property by renting it for an increased period, which could be a year or more. If you use your home for a business, you can deduct the loss.
It depends on how much you still owe on your property, but selling your home for lower than you want could require a short sale. This means your lender allows you to sell the home for less than you owe. The lender may either forgive any remaining debt or require you to pay some of it back over time. Note that a short sale should only be used under specific circumstances like an inability to make mortgage payments or qualify for refinancing or modification of the loan. Further, a short sale can damage your credit, making it more challenging to purchase a home in the future.
There are other options than selling your home for a loss. For example, if you’re selling because you need to move, consider renting the property to cover the mortgage payments. Continue renting until the market improves. You can also try finding someone to assume your mortgage is you have one insured by the Federal Housing Administration (FHA). Through assumption, the individual receives the title to your home and takes responsibility for the remaining mortgage payments. You can require the person to make a down payment equal to the amount of equity you have in your home; this means you walk away without suffering any loss.
Sell Your Home for Cash
If you need to sell your home quickly in Salt Lake City, consider selling to Bob Buys Houses for cash. We offer a reasonable price with no fees or commissions; you choose the closing date, and we give you cash shortly after. Contact us for more information today!