Others have chimed in on the capital gains issue, so I'll focus on another issue.1. When I sell, I know I need to prepare to pay next tax season. Lets suppose I sold off all $192k in the brokerage. Current capital gains are $50k, so I'm estimating (24% tax bracket) 0.24*50,000 = $12,000. Does that sound right?
2. When to sell? Probably now, if I want to have the liquidity next year.
3. How much to sell? Tougher question. We are looking at homes in the $750k-850k range. So 20% downpayment, closing costs, movers, I think I want $200k available. Selling off the entirety of the brokerage kind of gets me there... leaving CD+cash for emergency purposes. But if I could leave some money in there thats obviously nice.
Thoughts? What am I missing?
When to sell is a function of two issues: 1) asset values in the future and 2) best time to purchase a property. Despite doing 70/30 equity/bonds for my portfolio in my 40s, I was quite conservative with my downpayment. If I were in your shoes, I'd sell all equities that have been held for long-term (as to qualify as capital gains). You've done quite a bit better than the conservative approach (which is to say, Treasuries and HYSAs, both of which have much lower returns and are taxed federally at 24% to boot). Consolidate your gains, make them actualized, and stick the funds in a place that won't lose value.
This is particularly the case if your market is hot from March to July but cools afterwards. If that is the case, you'll find that the $800k house to get easily bid up to $875k in the Spring while it might sit with little interest even after a price cut to $775k in Fall/ Winter. That difference is in asset price is likely much greater than what the corresponding difference in rent would be.
Statistics: Posted by InvisibleAerobar — Mon Oct 14, 2024 9:38 pm — Replies 6 — Views 368