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Bought our home for 230k in 2010. It will now sell for 390k. We are interested in buying our "dream home", which is 520k.

At this time we have $6k in owed taxes. Is it possible during the sale of our current house, or the purchase of the new house, to get out money to pay off the taxes?

I'm thinking this would be better than securing a personal loan since we will be applying for a mortgage.

  • Are the taxes owed for the home you're selling (i.e. not income taxes)? Are they for the current year or past years? – D Stanley Aug 8 '17 at 15:53
  • They are for 2016 income taxes. – Johnathan Elmore Aug 8 '17 at 15:56
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    OK. If it were property taxes that would have been taken care of when you sold the property (as taxes would have been paid at closing). In this case Hart is right - you can just "cash out" by not using all of the sale proceeds for the down payment. – D Stanley Aug 8 '17 at 16:01
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You can definitely get access to cash during the selling of your home and buying of a new one. Think of the home sale and buy as two distinct transactions.

  1. You sell your house, come away with some amount of cash, let's say $180k.
  2. You do what you want with that money, in this case, maybe you want to put down $150k on the new house to have a little extra cash on hand.

As long as your mortgage qualification doesn't depend on all the proceeds from the first sale being rolled into the new mortgage, you'll be fine.

  • Thanks. So it's the sale of the house that makes this possible, not the purchasing of a new loan. That makes sense! Seems very obvious now that you spelled it out :) – Johnathan Elmore Aug 8 '17 at 15:54
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Most house transactions require the taxes due to be paid off during closing. This would normally be taken from the proceeds of the sale. Since you have plenty of equity you won't have to come up with cash to do this.

Depending on your location taxes are sometimes paid up to the date of sale or in advance or arrears by up to six months.

In any event you should have plenty of money to pay off any taxes you may owe. Your real estate agent should be able to give you a definitive answer (or the title agency if you are selling it yourself).

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