Wondering if you can sell your home a year after you purchased it? The short answer is yes, you can — but you’ll likely lose money.
While there’s generally no legal restriction to selling your home a year after you buy it, it’s important to understand the significant downsides of doing so. From additional closing and moving costs to negligible equity built in such a short timeframe to capital gains taxes, don’t stick that “For Sale” sign out on your lawn just yet.
In this article, we’ll cover the key points to consider, including:
- How much money you could lose
- The various factors against you when you sell too soon
- Alternatives to consider instead of selling
- Strategies for minimizing losses if you do need to sell
- Answers to other frequently asked questions about selling a property early
Quick facts on selling a home after one year:
✅ Yes, you can usually sell your home after just one year.
🚫 Expect to lose money, potentially around $20,000–30,000 or more.
📉 Short-term capital gains taxes apply for any profit made on the sale.
📈 You will have added little equity after just 12 months.
🏠 Consider alternatives like renting out the property, waiting longer, or using low-commission services if you must sell.
💸 How much money will I lose if I sell after one year?
Selling a property after only one year of ownership is very risky, financially speaking — and that’s without taking into account the burden of moving again so soon. Even if your house appreciated in value, you could face costs of tens of thousands of dollars, which could easily erase any profit.
1. Capital gains taxes
Capital gains taxes are likely to be one of the biggest costs when selling a home, and they are charged on the profit you make when selling your house.
Capital gains are split into two sides of the one-year mark — short-term capital gains happen when you sell an asset owned for one year or less, while long-term capital gains are assessed for those held for more than a year. Short-term capital gains are treated as income, so it is taxed at your ordinary income tax rate (up to 37%, depending on your bracket). Long-term capital gains are more favorable (up to 20%).
But if you can wait to sell until after two years, you may not have to pay capital gains taxes on profits less than $250,000 (or under $500,000 if married and filing jointly). This Exclusion of Gain stipulation requires that you owned and resided in the property for at least 24 months.
Let’s look at a few scenarios for how this could play out:
| Sell after 10 months | Sell after 15 months | Sell after 25 months | |
|---|---|---|---|
| Purchase price | $400,000 | $400,000 | $400,000 |
| Sale price | $415,000 | $425,000 | $450,000 |
| Gross profit | $15,000 | $25,000 | $50,000 |
| Taxable income bracket | 24% | 24% | 24% |
| Capital gains treatment | Short-term capital gain | Long-term capital gain | Section 121 Exclusion |
| Applicable tax rate on profit | 24% (same as income) | 15% | 0% |
| Taxes owed on profit | $2,880 | $6,000 | $0 |
As you can see, there’s significant money on the line based on when you sell, so we recommend waiting, if possible — ideally more than two years, but at least more than one year.
This is a simplified example. The IRS will let you subtract the cost basis of the home (what you paid for it, plus any qualifying improvements) and selling expenses from the sale price of the home. These deductible selling expenses include:
- Real estate agent commissions
- Title and escrow fees
- Legal fees
- Marketing costs
- Transfer taxes
2. Closing costs
Whenever a property changes hands, there are closing costs involved. When you bought your home, you likely had to pay for a portion of the closing costs. However, closing costs are higher for sellers because they typically cover agent commissions (usually around 3% to the buyer's agent and 3% to the listing agent).
As a buyer a year ago, you could have paid 3–5% of the sale price for things like lender fees and title and escrow charges. As a seller, you may be looking at 8–10% of the sales price when you factor in other closing costs, like transfer taxes and prorated property taxes.
Usually, you'll earn back those costs as the home’s value increases over time, but if you're selling your home after just a year, it probably won’t have appreciated enough to cover the losses.
While you can't get your closing costs down to nothing, one way to lower them a bit is by using a free low-commission service like Clever. It could save you thousands of dollars in closing costs!
3. Interest paid
When you take out a mortgage, your monthly payments go toward paying down both the principal and interest balances. Unfortunately, most loans are front-loaded with interest payments, meaning the largest part of your early payments cover interest.
Since you’re not really reducing the principal balance you owe, you haven’t effectively increased your equity by much. Selling your home after just one year can put you at a disadvantage — you’ve mostly paid your mortgage lender interest and barely put money toward your net worth.
Over time, the interest-to-principal ratio would eventually balance out, and an increasing amount of your payments would go toward paying off your house. By selling so close to when you bought the property, you're basically just giving your money to the bank for little equity.
✍️ Editor's note: Remember that some mortgages also have a prepayment penalty, meaning you'll get hit with fees for paying it off early. Check your loan terms to understand if this applies to you.
4. Moving costs
The logistics and costs of moving again after just one year can be daunting:
- Local move: Expect to pay anywhere from $550 to $2,000+, depending on your local market and the size of your move.
- Long-distance move: Expect to pay somewhere between $2,000 to $7,500 or more, depending on the distance, number of days, fuel costs, and other factors.[1]
These moving cost estimates don't even include things like storage unit costs, packaging supplies, house cleaning, and other factors. While these are smaller fees, they all add up to one big bill.
Can you sell your house after a year and still make a profit?
Given all the costs we’ve outlined, it’s definitely challenging to walk away with a profit after owning a home for only a year, but it’s not impossible. Here are a few approaches you can try to minimize losses, maximize savings, and hopefully come out ahead (or at least close to even):
Boost your home’s value with small upgrades
Focus on lower-cost, high-ROI improvements to increase your property’s value and appeal without breaking the bank. Projects like updating your entry door, adding a new coat of paint, replacing your garage door, and replacing windows can all help you earn more on the sale of your home.
Avoid money-draining projects with low ROI like a full bathroom or kitchen remodel. If you're not sure where to get started, reach out to a local realtor. They'll be able to tell you how much your home is worth and advise you on the best projects to improve your property's value. Get a free home valuation report from an agent in your area!
Wait for a better tax tier
If possible, even waiting just a few months could save you thousands of dollars on your tax bill. Waiting until just after one year of ownership will move you from the short-term to the long-term capital gains tax tier. If you can wait it out until year two, you likely won't need to pay anything.
You may be able to get out of paying capital gains taxes entirely by finding tax exemptions. For example, you may qualify for a tax exemption if you've lost your job, had a big health issue, or got a divorce.
DIY your move to save money
If you have the time, strength, and energy (and some helping hands, ideally), packing your belongings and managing the move yourself can save you hundreds or even thousands of dollars. You can rent your own moving truck or van, source boxes and other moving materials from a local supermarket, and pay your team in pizza slices.
Also, keep an eye out for first-month specials at your local storage unit facility — this may give you a short-term place to store things at a low cost.
Sell FSBO (For Sale By Owner)
By going the FSBO route, you can save on seller agent commission fees, which can lower your closing costs by around 3%.
However, you'll need to manage all of the listing, negotiating, and paperwork on your own, which can be intimidating. And you'll still need to offer a competitive buyer's agent commission, so you're not completely off the hook when it comes to realtor fees.
Use a low commission brokerage
Low-commission real estate companies like Clever connect you with full-service agents that provide you with all of the support you need throughout the selling process at a fraction of the cost. This can save you thousands of dollars in commission fees, which makes a big difference when selling your home so soon after purchasing it.
Sell with a top local agent for just 1.5%
Alternatives to selling your house after less than a year
Renting out your home can be an option to consider to avoid the losses associated with selling a home after just a year. It can help you cover both your mortgage payment and taxes until it makes more financial sense to sell.
Long-term tenants
If you keep your original home, move into a new principal residence, and find some renters, you can recoup some of the costs from your initial purchase and earn passive income from being a landlord. Renting out your home to long-term tenants can be a great way to receive a predictable income stream as you wait for a more favorable time to sell.
- Pros: Consistent income, offsets mortgage
- Cons: Landlord responsibilities (e.g., maintenance, repairs), risk of vacancy
Short-term tenants
If you prefer not to deal with official leases, consider listing your property on Airbnb or VRBO instead. That way, you control how often people stay there, giving you flexibility if you decide to make a quick sale.
Another flexible alternative to look into is travel nurse housing, which provides accommodations for traveling medical professionals on short- to medium-term contracts.
- Pros: Likely higher per-night income, more flexibility
- Cons: More hands-on management effort, local regulations
Selling your home after a year or so of ownership usually means money lost, but it is possible to offset some costs. When approached the right way — thoughtfully, strategically, and patiently — you might just come out even or ahead.
Talk to an experienced real estate agent who can help you assess your options and make the best financial decision given your circumstances. If you’re looking to sell, Clever can connect you with top-rated agents in your area who can sell your home for as low as a 1.5% listing fee — saving you thousands of dollars. Reach out today for a no-obligation consultation!
Frequently Asked Questions (FAQs)
What happens if you sell after 1 year?
When you sell a home after just one year of ownership, you will be facing a variety of costs. There will be long-term capital gains tax on any profit made, additional closing costs (which are higher for sellers), limited equity built up, and expenses related to moving.
How much will I lose selling after 1 year?
The total you stand to lose after selling depends on a variety of factors, including the above expenses, the purchase price and sales price of your home, your mortgage terms, and more. Expect to lose around $20,000–30,000 or more, in many cases.
Can I sell within 6 months of buying?
Yes, usually you can sell your home at any time after purchasing it, but you’re very likely to lose money on the sale. With less than one year of ownership, you’ll need to pay the higher short-term capital gains tax on any profit made. Also, check your mortgage terms in case there’s a prepayment penalty.
How can I avoid capital gains tax if I sell before 2 years?
You generally can’t avoid a capital gains tax when selling a home with less than 24 months of ownership. However, you may qualify for exemptions for certain circumstances, such as divorce, military service requirements, or a death in the family.
Is it ever smart to sell after one year?
Selling a property after just one year might make financial sense in some situations. For instance, if you are an experienced home flipper, you could successfully come out well ahead after making renovations and repairs and then reselling it for a profit. If you have unavoidable financial hardships, you may need to sell, but in most cases, we recommend waiting at least two years to maximize your return.