Ways to Free Up Money When Buying a House
Buying a house is a huge undertaking – it will probably be the biggest purchase you make in life (until you buy a bigger house). However, beyond the purchase price, buying a house has a lot of costs – you will need to furnish the house, maybe it will require some repairs prior to moving in, and many new homes for sale don’t even include landscaping in the backyard. That is why it is so important to try and free up some extra money when buying a home.
Check Your Portfolio
One of the first things you should do when looking to free up some extra money when looking to buy a home is look at your overall portfolio. Do you have any mutual funds or other investments that have been underperforming over the last few years? Are these assets in a regular brokerage account? If so, it could be a good idea to sell these, claim the loss as a deduction on your taxes, and use the cash you freed up to fix up your new house. Tip: You can offset capital gains with investment losses and use the remaining loss to reduce taxable income up to $3000 married filing jointly and $1500 for single taxpayers. Be careful of the “wash sale” rule which states that you cannot reinvest the proceeds of a transaction that generates a tax loss for 30 days if you plan on using the loss to offset gains. In other words, if you sell an investment for a loss and reinvest those proceeds within 30 days you cannot use the loss for tax purposes.
Sell Some Assets
Many people have assets lying around them and they don’t ever realize it. Do you maybe have an old timeshare that you haven’t visited in years? You could sell your timeshare and free up some extra money. Not only would you get the price you sold it for, but you would also save on annual maintenance fees and property taxes.
Many people also have old jewelry or broken jewelry locked away in a jewelry box (think about the single earring you have left, or the old plain chain that doesn’t latch anymore). With gold near all time highs, now is a great time to find that old stuff you never wear anymore, and sell it back for some cash. Online auction sites are a great way to sell items you no longer need.
Have a Moving Sale
Finally, before you move into your new house, you should have a moving sale and try to sell anything you don’t want to take. If you setup your sale well, and advertise it online and in the paper, you could get some good traffic and sell a lot of stuff that you don’t want any longer. This can provide some spending money for your new place!
Ask for a Gift
Do you have a relative or friend that has lots of money and doesn't know what to do with it? You can ask a relative or friend to gift you up to $13,000 per year without incurring a tax liability. Obviously not everyone is comfortable asking for money so this might not be an option for you. Personally I think this is a perfect way for close family and friends to make a lasting gift. The Federal Gift Tax Exclusion amount is $13,000 for 2012 and is adjusted annually for inflation.
Do you have any suggestions for saving money that could be used as a down payment on a home?