I sold my house - now what?

It's easy to only focus on the packing details, however there are a few other items to consider. Take the time to backwards plan and check these items from your task list so the day you hand over the keys and sign the papers; it feels smooth and easy.

"To-Do" List before you close:

• Make a plan for how you will move your items. From pods/container companies, moving trucks, etc. It's time to establish the how you will get from pt A to pt B with all of your items. 

• Home insurance. All of the companies that hold your insurance need to know, but the house insurance is most important.

• If you are buying a condo or town home - is it time to get rid of the lawnmower or snowblower? What else can you donate or sell?

• Change your address. Post office, banks, magazine/newspaper subscriptions, providers like dentists and dr's, IRS, friends/family....what else is mailed to you on a regular basis that you need to make sure they know you no longer live at a particular address? Don't forget to tell your employer as well.

• On that note, utilities. It's time to give each of them a call and let them know that you are will no longer be the owner and that your name will be established at the new address. Don't forget your land line and cable companies (do you still have those?)

• The last time you lock the doors, consider leaving home ownership paperwork to the buyer. Leave any and all manuals you have for appliances, any warranties for things you might have replaced like a water heater. They will appreciate this and it will reduce any last minute calls. If you are apart of an HOA, leave behind any and all docs. Same with remotes to garages, any and all sets of keys. Don't forget to share the garage code. 

After Closing:

Pay attention to tax laws. Tax laws can and do change frequently. This is a frustration that everyone has to deal with, but there are sometimes advantages to it as well. If the tax laws change in your favor – such as allowing you to keep a higher percentage of the profits from the sale of your home – you certainly want to be aware of it. Even if changes work against you, it is still better to know about it and to plan accordingly. One thing to keep in mind is at the current time you can exclude up to $250,000 in profits if you are single and $500,000 if you are married as long as the home was your primary residence. You also need to have lived in the house for two out of the last five years. See capital gains when selling a home for a complete explanation of the tax law.

Keep your paperwork in order. Keep records related to home improvement.  All of the paperwork related to the sale of the house should be kept available for tax time because you will need to have proof of the expenses you paid and the money you made from the sale. Even after your tax return is filed, you will still want to keep these records in case the IRS comes back to audit you.

The IRS may allow you to use home improvement expenses to improve your tax situation – especially if you have a good-sized capital gain. However, you will need documentation of all the improvements you paid for while you owned the home if you are going to take advantage of this. Audits do happen, and you do not want to be unprepared if it happens to you. Keep in mind there is a difference between a home improvement and general maintenance as far as the IRS goes. Generally speaking, a home improvement is something that will add value to your home. Repairs for your home, on the other hand, are considered general maintenance. A perfect example would be replacing your roof being an improvement and a few blown off shingles being a repair. House Logic does an excellent job of explaining this in what is considered a home improvement for tax purposes.

Go over the settlement statement with a fine-toothed comb. While your real estate agent, the buyer and the other companies you deal with during your sale may all be terrific, mistakes still happen. And sometimes people try to make a little extra if they can get away with it. Make sure that all the payoff amounts are correct on any mortgages, that any extras your agent promised you are there and that all the fees listed are costs you knew about beforehand. No surprises are allowed – and if there are surprises, they should be explained to you in detail. There may also be some suggestions to leave certain things off of the settlement statement. Do not agree to this without discussing your legal risks with an attorney beforehand.

Invest your proceeds in a money market fund or other relatively safe investment vehicle. When you are selling a home and not immediately reinvesting your profits by purchasing another house, it makes sense to have your money where you can get a hold of your funds quickly. If you get a good chunk of money out of the sale of your home, you do not want to store it under the mattress or a tomato plant somewhere. You want to put it where it’s relatively safe, but that will also yield some return. Money market mutual funds are an attractive option for many people who sell their homes. They give you a decent return on your investment, yet still, provide you with access to your money if you need it – such as when you buy your next home.

Take your time buying another home. If you have the patience and are willing to rent for a little while, you will be more likely to find the home of your dreams at a reasonable price. Desperation and a ticking clock are not beneficial when you are trying to make a sizable financial deal – such as buying a home. Taking some time to make sure you have the right Realtor, that you are looking in the area you want to live, as well as getting the kind of house; you will be happy with is good business.

Think about your down payment strategically. While it may seem obvious that the bigger the down payment you have, the better off you will be in your next home purchase, this is not necessarily true. Depending on where you are in life, it may be financially beneficial to stick with the standard 20% and put your extra money elsewhere so it can bring in more significant returns. This is especially true if you are a younger home buyer with a little more tolerance for risk.