How do we put this equity into our new home?
Reduce the amount that you borrow by the amount you get from the sale of your first home. If you have other debts, you should also pay those off, but make sure you borrow no more than 80% of the value of the house you're buying.
Are we going to have to pay taxes on the income of the sale of the first house before we can pay on the second house?
If you've lived there longer than two years, then probably not. You can exclude up to $500,000 in gains on the sale on your primary residence if you have:
- Owned the home for at least 2 years (the ownership test),
- Lived in the home as your main home for at least 2 years (the use test - if you plan on renting your home for part of the year study this use test carefully, the amount of gain you can exclude from taxes may be proportional to how much you use it vs. rent it), and
- During the 2-year period ending on the date of sale, you did not exclude gain from the sale of another home.
Even if you did owe taxes on the gain, those would just be paid when you file next year; they would not have to be paid before you bought another house. More info here:
Is there any particular strategy we should use to maximize the value we have in our first home?
The value you get from your home will be all about the sales price. Most of that is determined by location and amenities, but depending on how patient you are some general things you can do to improve the sellability are:
- Store any unnecessary furniture to make the home appear larger
- Remove most personal items (knick-knacks, pictures, etc.)
- Get a professional cleaning, especially carpets
- Keep the pantry and cabinets nearly bare - just enough to live on for a few days.
- Make sure landscaping is trimmed and healthy
A good realtor will help you with these any other "curb-appeal" items specifically for your home.