Selling your house to buy another one: practical guide, advantages and risks

Selling your home to buy a new one is an increasingly common practice, especially among those who want to move to a new area, improve their living space, or invest in a property that better suits their family's new needs. But how can you sell your home and buy another one without running into difficulties?

In this guide, we explain how to best manage the dual real estate transaction, evaluating the pros, cons, tax breaks, and all the costs to consider.

Is it better to sell first or buy first?

Those who find themselves in this situation have three possible options.

1. Sell first, then buy: this is the safest option. It allows you to know the actual proceeds from the sale and approach the search for a new property with greater peace of mind, even accessing tax breaks

2. Buy and sell at the same time: in this case, the two transactions must be coordinated in terms of timing and require professional support. You may have to comply with less than ideal time or contractual constraints

3. Buy first, then sell: you commit financially to the purchase before you have sold, risking having to lower the price of your home due to liquidity needs or having to pay two mortgages at the same time

The advantages of selling before buying

• Better bargaining power in the sale
• You are not in a hurry and can optimize the sale price
• More liquidity for the new purchase
• By cashing in first, you can request a smaller mortgage or even avoid applying for one
• No double mortgage
• If you still have an active mortgage, you can pay it off at the time of the deed and free yourself from further financial commitments
• Access to first-time home buyer incentives
• If you sell your first home within 12 months of purchasing your new one, you can maintain or regain tax benefits

Carefully plan the timing between the preliminary agreement and the closing. Coordinating two real estate negotiations can be challenging without the support of experienced professionals.

**Steps to sell your home and buy another one

1. Have your property valued: ask for a professional and realistic estimate from several agencies or appraisers. Knowing the actual value is essential for calculating the budget for the new purchase

2. Calculate the net proceeds of the sale: deduct agency commission fees, mandatory certifications, any taxes on profits if you sell before 5 years, notary fees, etc.

3. Estimate the costs of the new purchase: real estate agency, notary, taxes (registration, mortgage, cadastral), any mortgage expenses (application, appraisal, insurance)

4. Check if you are eligible for first-time home buyer benefits

How to manage your mortgage if it has not yet been paid off?

You can sell even if you still have an active mortgage. Here are the two main options:

• Mortgage payoff: request a payoff statement from your bank and settle the debt with part of the price received at the closing. The bank will take care of canceling the mortgage, thanks in part to the simplified procedure of the “Bersani decree”

• Mortgage assumption: the buyer can take over your mortgage, subject to the bank's consent. In the case of a liberating assumption, you are released from the debt. In the case of a cumulative assumption, you remain liable if the buyer does not pay

Find out how to sell your home with an outstanding mortgage here: (link to FAQ on selling with a mortgage).

Conclusion

Selling your home to buy another one is perfectly feasible, but it must be planned carefully. If managed well, it allows you to improve your quality of life, save on costs, and optimize your time.

To avoid unexpected events, rely on a professional who can guide you through every step of the process. At Toscano, we are at your disposal to accompany you in the sale and purchase of your new home.