How much will I actually walk away with?

Less than the sale price minus your mortgage. Between selling costs, the cost of buying your next home, and the move itself, the gap is usually larger than people expect, so the number to plan around is your net after both transactions.

When you're moving within the area, the money from one home becomes the down payment and reserves for the next. Getting that number right decides what you can comfortably buy.

What comes out of the sale

• Your mortgage payoff, including interest through the closing date. Your lender's payoff statement is the exact figure.
• Agent compensation for both the listing side and, if you offer it, the buyer's agent. That's an expected cost of selling, so plan for it from the start.
• Transfer taxes: Virginia's grantor tax, plus the regional transportation tax and WMATA capital fee that apply in Northern Virginia. The seller typically pays these at closing.
• Settlement fees: the settlement or closing fee, lien releases, recording, and brokerage admin fees.
• Prorated property taxes and any HOA dues owed through the closing date.
• Repairs or credits negotiated after the buyer's inspection.
• Preparation costs before listing: cleaning, painting, repairs, and anything else that helps the home sell.

What it costs to buy the next one

• Buyer closing costs: lender fees, title insurance, recording taxes, and prepaid taxes and insurance. Plan on roughly 3% of the purchase price.
• Moving costs, and possibly storage or short-term housing if the timing doesn't line up.
• Carrying costs if you own both homes for a while. Should I buy first or sell first? covers when that's worth it.
• Day-one costs at the new home: window treatments, appliances, and the projects you'll want done before you unpack.

An illustrative example

Here's how the math works for a home that sells for $800,000, with the owners buying their next home for $700,000.

All figures are estimates for illustration only and are subject to third-party verification. Your actual costs will depend on your sale price, loan payoff, negotiated terms, and settlement company. A seller net sheet for your home gives you the real numbers.

Sale price minus the mortgage suggests $520,000. The owners in this example would actually have about $420,000 to put toward their next home.

Taxes on the gain

Your taxable gain is different from your equity. It's your sale price, less your costs of sale, minus what you originally paid for the home and the cost of documented improvements you've made since. Paying down your mortgage doesn't change it.

If the home has been your primary residence for at least two of the last five years, you can generally exclude up to $250,000 of that gain from federal tax, or $500,000 for a married couple filing jointly. Long-time owners in Northern Virginia can exceed that, because the limit hasn't changed since 1997. Keep your receipts for improvements, since they reduce the gain. If you might be over the limit, talk with your tax adviser before you list.

The variables you control

Two items on that list move the most: the sale price and the preparation spending. Both come back to condition. Some projects return more than they cost because buyers deduct far more than the repair is worth. Others never pay for themselves. A Home Audit sorts which is which before you spend anything.

If you're planning a move within the area, start with how I approach rightsizing.

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