If you are purchasing or selling a home in 2022 there will be a number of different out-of-pocket expenses. If you are purchasing a home this year this could include a down payment, closing costs, and maybe even the cost of a home inspection. If you are selling a home this might mean the cost to get your home in its top shape and ready to list.
These expenses can add up to quite a bit of money and one method of finding some cash to cover these expenses is to use your tax return. This is a common tactic used by many buyers and sellers to help them successfully purchase or sell a home. The company SmartAsset has estimated that the average tax-paying citizen in America will receive a refund of about $2897. Of course, this number varies by state and the person’s income as well as write-offs.
How buyers can use their tax refund to help them purchase a home
There are several ways that a home buyer can use their refund to help them with their next home purchase in 2022. Some of the ways using refund money could be helpful include:
Helping to pad your down payment savings. The down payment is the largest out-of-pocket cost that most homebuyers will end up with. A tax refund can significantly put boost your down payment savings. Most often your refund will not pay your entire down payment means but it can go a long way in getting you to your goal.
Covering the cost of a home inspection or appraisal. Though many buyers are choosing to waive the inspection contingency this does not mean that you should not still get an inspection on your own dime. Having a professional inspection conducted will help to give you clear insight into the condition that the home is in. An appraisal is most often a mandatory requirement of a mortgage lender but the expense is paid for by the home buyer. These items can both cost several hundred to just over $1000 depending upon the property.
Help pay closing costs. Closing costs are additional expenses that the borrower must pay at the time of signing the final paperwork to officially close on the sale of the home and become the new legal owner. The average closing costs are anywhere from 2% to 5% of the purchase price of the property.
How a tax refund can help sellers
Getting your home ready to list can take a fair amount of money. Using some of your tax return money to get your home in top shape could help it to sell faster and for the most amount of money possible. Here are some areas where sellers can put their tax refund money to good use:
Making repairs. If there are items in your home that need significant attention it is worth completing them with the use of this money. Make sure you check with your trusted real estate agent and discuss what items really should be repaired before people come to see the home and what is not a dealbreaker and better left to the next buyer.
Small upgrades/updates. If your home is looking old or tired in some places you could use a portion of your tax refund to tackle some small projects to make your home feel fresh and full of life again. The cleaner and newer your home feels to a buyer the more excited buyers you will have making offers.
Purchasing your next home. No matter if you are selling to purchase your next bigger dream home or planning to live a simpler lifestyle by downsizing, a tax refund can help you to pay for the cost of your next home purchase.
A tax refund can be a nice chunk of change that could help out in significant ways for a home purchase or sale even though it may seem like a very small amount of money as compared to the overall budget of purchasing or selling a home.
For more information on real estate on the Forgotten Coast, including homes in Port Saint Joe, please contact us anytime.
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