Many factors may contribute to a desire to move. Your motives may be strictly monetary, or may be reflecting life changes. Or both.

Whatever the reason, you naturally will want to make a profit on the sale — or not lose money, at the very least. But (assuming nothing is forcing you to relocate immediately) is there an optimal amount of time you live in the house before selling it?

Unfortunately, there’s no one magic number. To figure out what works in your case, you first need to crunch some numbers. Estimating the costs to close a sale and to move, analyzing local real estate market conditions and — most of all — figuring the amount of equity (outright ownership) you have in your current home are all important factors to consider before selling your house.

Reasons you may need to sell your home

You have monetary concerns

People often opt to move for financial reasons. Perhaps you’ve lost your job or your income has dwindled significantly, and so you’re looking to downsize. Or you have undergone a divorce or change in your living situation.

Of course, there can be happier reasons too: Your income or budget has grown significantly. You’ve gotten married. You want a different home layout and don’t wish to undertake major renovations, or the house is in a style that can’t feasibly be renovated.

You need a bigger home

You are expanding your family or caring for live-in relatives, such as aging parents. You need a dedicated home office for hybrid or remote work. Or you just would like a larger property.

It’s a seller’s market

While you should think of your home as a home first and an investment second, sometimes the housing market seems so advantageous for sellers that you can’t resist the urge to take the money and run. This is especially true if your property’s value has appreciated significantly since you purchased it.

How soon can you sell your home after buying it?

There is no hard-and-fast answer to this question. But on the whole, the longer you can hold onto your home, the better off you fare, financially speaking, when it is time to sell. This relates to the concept of building equity (ownership) in your home.

What is home equity, exactly? It’s the difference between your home’s market value and what you still owe on your mortgage. In other words, it’s the amount of the home you own outright. If you made the proverbial 20 percent down payment on a $300,000 house when you bought it, your equity — ownership stake — is 20 percent of that, or $60,000. With each mortgage payment you make, you reduce your debt and increase your equity (percentage-wise) a little.

The dollar amount of your equity also increases as your home value increases. That’s why it behooves you to wait. Historically, homes have appreciated 3 to 5 percent annually each year.

The real estate industry refers to the “five-year rule” as a good rule of thumb when deciding how soon to sell your home. This has to do with the amount of equity the average homeowner has built in their home after five years of possession, and it also takes into account the costs associated with selling a home (and, if applicable, with purchasing a new one).

“Five years is a good, comfortable mark,” says Lawrence Yun, chief economist at the National Association of Realtors (NAR). “If the price of your home appreciates considerably, then even three years would be fine, especially if your conditions require relocation.”

If at all possible, you will want to ensure the equity you have built in your home will more than cover any selling and moving expenses.

What factors must you consider before selling?

Covering initial costs

The amount a homeowner nets — or walks away with — after the sale closes is known as their net proceeds. The first thing to realize: Net proceeds are not the same as net profits. So, to get started, you have to consider how much you paid for the property, and consider how much you owe if you are still paying off a mortgage. Don’t forget to factor in the rise in the cost of living and inflation. $300,000 doesn’t buy today what it bought five years ago.

The second thing to realize: Your net proceeds are not the same as your home’s purchase price, even if a buyer pays the full amount of your ask. Why? Because there are all sorts of costs associated with selling your home. Some are closing costs (see below), which will come out of that buyer’s check, and some are initial costs or incidental ones.

For example, you may wish to stage your home to maximize its wow factor — the average cost falling between $752 and $2,844, according to data from HomeAdvisor — or at least, have it professionally cleaned. You may also want to make some repairs — freshen the paint, fix that broken window — and do some spruce-ups for curb appeal. If the appliances are old, you may want to purchase a seller’s home warranty to cover them.

All this needs to be figured into whether it makes sense economically for you to sell now — and the list price, which you’ll discuss with your real estate agent. To get started, crunch the numbers. Your goal is to walk away from closing with as much as possible; ultimately, you will want to at least break even.

Paying off closing costs

There are plenty of other expenses involved in selling your home: the real estate commission payable to your real estate agent (around 5 to 6 percent), property and transfer taxes, notary and attorney fees. All of these fall into the category of closing costs, which generally come out of the purchase price (you don’t pay them out of pocket, usually).

Closing costs that you as the seller will pay vary, depending on your property and where it is located. Generally speaking, you can expect to pay between 1 and 3 percent of the home’s total sale price in closing costs, according to data from CoreLogic, though sometimes they can be as high as 5 to 6 percent.

Avoiding capital gains tax

Add it all up, and you begin to see where the three-to-five-year rule comes from: It generally takes that long to accrue enough equity to pay off all the prep expenses and closing costs.

There’s another number you should keep in mind for hanging onto your house before you sell: two years. And that’s for tax purposes — specifically, capital gains taxes.

Capital gains taxes are based on the net profits (the capital gains) you stand to make from the sale of your house. (Yes, residential real estate counts as a taxable asset, just like a stock). However, there’s a loophole: The IRS generally allows homeowners a profit of up to $250,000 ($500,000 if married and filing jointly) before the capital gains tax kicks in. But there are two big conditions: You have to have owned the property for at least two years, and it has to be your primary residence for at least two out of the five years immediately preceding the sale.

Finding a real estate agent to help sell your home

Choosing a real estate agent to work with can be one of the most important stages of the process. You will want someone who is well-versed in the local market.

This person will be responsible for helping you set (and later on, adjust if necessary) your listing price, hosting open houses and showings, negotiating with buyers, and ushering you through the contractual process of selling your house. For all of these reasons, you will want to find someone experienced, trustworthy, and pleasant to work with.


  • Even if your home has appreciated speedily, you likely stand to lose money if you sell before the one-year mark. This is due to the capital gains tax, which is high on assets owned so short a time, as well as the costs of closing on a second house so soon.
  • You can buy another house before selling your old one, though this may greatly impact your ability to acquire financing for the new property. You may wish to consider a mortgage contingency as a part of your real estate contract on the newer home. You might also consider back-to-back escrow, which facilitates the simultaneous selling and buying of properties.
  • Once you have lived in a home for two years as your primary residence, the IRS will allow you to realize a profit of $250,000 before exposing your earnings to capital gains tax. 
  • While you do not require a real estate agent to sell your house, the data show that home sales including a seller’s agent tend to net higher offers than homes listed without a credentialed agent.