Before you buy a home, ask your Berkshire Hathaway HomeServices network professional to look into any potential deed restrictions that limit how you can build upon or use your property.

Deed restrictions are regulations imposed either by the local community or a homeowners association. These regulations can be found in the county clerk’s property records, the builder or planned community developer’s plans, and through homeowner associations’ Covenants, Conditions and Restrictions (CC&Rs).

Restrictions are required for cities to effectively operate services and to protect the rights and property values for all owners. This explains why adding a second story or operating a business out of your home requires a permit.

Homeowner association CC&Rs are designed to protect property values, foster public safety, and prevent disputes. HOAs typically want owner occupants only, and don’t allow rentals. Homes are built to conform to specific sizes, materials, colors and housing styles to make the community more attractive. Regular lawn care, exterior maintenance, and common area maintenance keep home values higher and make the community more desirable.

Housing market conditions change rapidly, with fluctuating interest rates, price and availability of homes. Your Berkshire Hathaway HomeServices network professional can help you with the following suggestions:

Step 1: Be financially prepared
Prequalification for a mortgage loan tells you what kind of loan is best, the interest rate you’ll pay, how much you can spend on the purchase price of a home, and whether you’ll pay private mortgage insurance.

Step 2: Be flexible
You may have to make compromises to your wish list, like moving further out to get the amenities you want, buying a fixer-upper instead of a new home, or getting a condo instead of a house. Be open to alternatives.  

Step 3: Plan for the long-term
Building equity takes time, so plan to stay in your home long enough to “repay” your closing costs. Closing costs for homebuyers account for 2 to 6% of the purchase price so it could take five to seven years to sell at a profit or break even.

If you sold your home in 2024 or early 2025, you could claim the maximum capital gains exclusions set in 1997. However, since these exclusions aren’t adjusted for inflation, many long-time homeowners still face capital gains taxes, notes Evan Liddiard, CPA and director of federal tax policy for the National Association of REALTORS®.

The maximum exclusion on homestead capital gains is $250,000 for single filers, and $500,000 for married couples. Sellers must have lived in and owned the home for at least two out of the past five years.

Subtracting the purchase price of the home from the sales price gives you the cost basis but you can minimize capital gains using an adjusted basis, like including the cost of any capital improvements you made. Capital improvements are permanent structural changes and restorations that enhance the property's overall value, its useful life, or adaptation to new uses.

Charitable donations and putting cash into tax-deferred IRAs can also reduce your tax exposure. Ask your CPA for more tips.