Closing is an important day for home buyers and sellers. As a seller, you’ll transfer your property to the buyer, pay off your mortgage in full and receive the proceeds from the sale, minus the expenses. You can use a seller closing costs calculator to help determine how much will go back into your pocket.
If you plan to use the proceeds to purchase a new home on the same day or soon after, ensuring that the closing goes smoothly is critical. After the closing is complete, you’re no longer the owner, which means you’ll have to relinquish possession of your home and give the buyer keys to all the doors and any devices, such as a garage door opener. By this time, your possessions should have been moved out unless you have an agreement with the buyer to stay longer.
While this can be an exciting time, especially if you’re looking forward to the move, it can also be an emotional experience, especially if you’ve lived in your home for years and created many memories. That can make it more difficult to manage the post-selling process, but knowing what to do beforehand can help.
Keep All Copes of Paperwork
Once your house is sold and closing is completed, you’ll want to keep copies of all the paperwork. You might be tempted to put it into storage or shred it, but it’s essential to have when filing your taxes. You’ll have to have documentation for both the proceeds of the sale and any expenses. Even after filing your return, you need to keep that paperwork in case of an IRS audit.
Keep Proof of Prior Purchases and Improvements
The cost of improvements made to your home during the time you owned it can help you at tax time. The IRS allows you to add that to its cost basis, which can be a big financial benefit, particularly if you have a significant capital gain. To use that tax provision, you’ll have to have all the receipts for what was spent on home improvements.
Continue to Stay Apprised of Tax Laws
To avoid taking a financial loss, be sure to keep on top of the tax laws even after selling your home, as they’re constantly changing. There may be new laws that can help you save at tax time.
Don’t Feel Pressured to Buy Right Away
If you don’t already have a home lined up to buy, don’t feel pressured to do it right away. If you aren’t sure of which area you want to move to, you might try renting in a neighborhood you’re interested in to be sure it’s where you want to settle. Remember, you have two years to defer tax on the profits of your sale.
In the meantime, you’ll need a safe place to put your money, perhaps a money market fund which provides a reasonable rate of return, daily access to your money, and safety. If your situation changes before you purchase another house, such as a job loss or a promotion, you’ll have to refigure your finances and how much you can afford to pay for a new house.
File a Change of Address
Whether you’re buying a home or renting for a while, don’t delay putting in a change of address. You can visit any post office or fill out a change of address form online via USPS, which also offers a Mover’s Guide.