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Things You Should Know About Selling Your Home in 2016

If you're planning to put your house up for sale in 2016, here are some important things to keep in mind.

It's a seller's market

Many people remember the price fallout from the housing bust. Even though most investors consider 2008/early 2009 to be the peak of the crisis, prices continued to drop for three more years before they hit rock bottom.

However, since 2012, prices have steadily climbed higher. They are currently within reach of the 2006 and 2007 highs.

It's important to note that location is a huge factor in determining how much of seller's market you can expect. In hot markets like San Francisco or Boston housing-boom-era practices are basically back. Many instances of bidding wars resulting in prices well above the asking price have been reported.

Conversely, areas that have less economic prospects are less favorable - having not quite recovered from the housing bust. A good rule of thumb: The more lucrative the area's economic future, the easier the home sale will be.

Mortgages could get more expensive

A key consideration in how much a seller will receive is how much the buyer can afford. Though low mortgages have helped drive prices in recent years the Federal Reserves new cycle of rate increases could make buying a home more difficult.

So far, the miniscule quarter-point Fed boost from mid-December hasn't pushed mortgage rates significantly higher. However, as demonstrated throughout history, tightening has usually cause-increased rates on mortgage loans. Sellers should be prepared for the realty that getting financing may become more difficult for prospective buyers.

Tax benefits favor home sales

The biggest tax break for ordinary taxpayers is the exclusion on capital gains for the sale of a personal residence. Single taxpayers can exclude up to $250,000 in gains from the sale of a home from tax and joint filers get an exclusion of $500,000.

To qualify, you must meet two requirements. First, the property has to be your main home. Also, you have to have lived in the home for a minimum of 24 months in the past years.

You can't have claimed home-sale exclusion on tax returns for the past two years. Sometimes, partial exclusions apply but consult your accountant or tax professional to make sure your aware of all the tax implications of a home sale.

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