Selling your property can provide several financial opportunities.
But what should you do with the money you make from a house sale?
Countless options are available if you want to invest it in other ways.
We’ve what you can do with money from sale of house.
1. Pay off your debts
Debt is one of the unfortunate realities of life.
Most people accrue debt throughout their lives, which can provide an uncomfortable headache as they struggle to pay it off.
It could be hugely satisfying to pay off debt, whether it’s:
- A mortgage on another house
- Credit card debt
- Student loans
- Loans on your car
- Personal loans
When you pay off your debts with the money you’ve made from a house sale, you don’t have to continue paying them off regularly for months or years.
Not only does this ‘free you up’ financially, but it will likely give you peace of mind that all your affairs are in order.
2. Re-investing in property
Just because you have made a reasonable sum of money from your last property sale, for some people, this does not mean that the investment needs to stop there.
Investing your money in the property market is always exciting, and many people make a full-time career out of developing and selling houses.
Depending on how much money you made from your most recent property sale, you may use these funds after Capital Gains Tax to ‘do up’ another property you already own that needs refurbishments or renovations.
Alternatively, the money you’ve made could act as a deposit on a new house.
If you choose to invest in property again, just be sure it is the right time. Speak with financial and property experts if you have any questions.
3. Improve the quality of your retirement
You are likely in a solid financial position if you have sold your property for a significant profit.
In this circumstance, some people take advantage of the situation by preparing for an early retirement.
You may dedicate your money to a holiday for you and your family or buying your dream car.
Alternatively, the money could be used for health-related considerations, such as taking out life insurance or paying for long-term care.
If your parents are alive and in their later years, you may wish to use the money to improve their quality of life, too.
How likely am I to make a profit on my house?
House prices have continued to increase for the past 5 decades. So, most people who have owned a property for a long time have seen its value rise.
Therefore, when the time comes to sell, it will likely be for a higher amount than it was first bought for.
Market conditions matter
You should always consider market conditions when selecting the right time to sell.
If many buyers are on the market, you will likely receive a higher offer and make more money than in a ‘cold’ market.
Capital gains tax
You should factor capital gains tax into any calculations on the profit you might make from your property if the circumstances require you to pay it.
However, even in this situation, the right financial advisors can guide you in reducing the tax you pay.
Some methods of doing this might include offsetting your losses against your profits, using the £12,570 tax-free allowance, or delaying the sale of a property.
Property type
You should also remember that the profit you make from your property sale may vary according to the property type.
For example, a modhulus home may have varying demand levels, compared with a post-and-beam constructed home, a ‘regular’ home, a period properties, etc.
Location
The location of a property can impact its current and future value.
Conservation areas, for example, help houses retain a lot of value. And houses near current or future school sites can also increase in value.
