As we move into 2025, the real estate market continues to be a topic of debate among analysts. Some have a positive outlook, while others predict challenges ahead. This raises the question: Should you put your home buying or selling goals on hold based on someone else’s interpretation of the market?
During President Trump’s last term, interest rates averaged 4%. Currently, no one expects rates to return to that level; instead, an average of 6% is anticipated. NAR Chief Economist Lawrence Yun forecasts a 9% increase in home sales for 2025 and 13% for 2026, with mortgage rates stabilizing near 6%. Redfin economists Daryl Fairweather and Chen Zhao predict that if President-elect Donald Trump implements significant tax cuts and tariffs, and the economy remains strong, the Fed will only cut its policy rate twice in 2025, keeping mortgage rates high.
However, it is crucial to realize that each article expresses an opinion. These quotes are not generated by someone with a crystal ball, so predicting the future is, quite frankly, a gamble. It is best to evaluate your own goals and focus on what is in your personal best interest.
Selling a home in 2025 comes with several tax implications that you should be aware of:
- Capital Gains Tax: If you sell your home for a profit, you may be subject to capital gains tax. The IRS allows you to exclude up to $250,000 of the gain from your income if you’re single, and up to $500,000 if you’re married and filing jointly, provided you meet the ownership and use tests.
- Ownership and Use Tests: To qualify for the exclusion, you must have owned and lived in the home as your main residence for at least two of the five years before the sale.
- Reporting the Sale: If you receive a Form 1099-S, you must report the sale on your tax return, even if you qualify for the exclusion.
- Mortgage Debt: If you had any forgiven or canceled mortgage debt, it might be considered taxable income unless it was discharged before January 1, 2026.
- Multiple Homes: The exclusion applies only to your main home. If you sell a second home or rental property, you will need to pay capital gains tax on the profit.
Do you have a desire to sell your home and relocate? Perhaps you have a growing family or wish to downsize. Maybe you live in the city and dream of living in the country, or having lived in the country, you would like to experience city life. Perhaps you are tired of maintaining your property and would like to buy a condo and let someone else handle the exterior maintenance. The list of dreams and possibilities is endless. Why wait until someone else says the time is right? It is your life. We must all consider ourselves blessed when we wake up on the green side of the grass, as no one knows what tomorrow will hold. Embrace your goals and focus on achieving them.
Buyers, there are numerous lending products available and many ways to explore them, either on your own or with the assistance of professionals such as accountants, attorneys, lenders, real estate agents, brokers, and Realtors. Do some investigative research and interview professionals until you find the tools you need to achieve your goals.
Sellers, you too have numerous tools at your disposal, whether you choose to sell traditionally as a For Sale By Owner or use a Flat Fee MLS Listing Service or Full Service Options. You can determine whether your primary focus is your profit margin or if you prefer to pay someone top dollar to do all the work for you. Additionally, there is always the option to keep your property as a rental, which we will discuss in another blog.
