Advice on proceeds from selling a house?

[82-T/A]

Guys, would really appreciate some advice. Just a quick backstory...


I live in Texas, and am moving to Florida for work.


I will be selling the house in Texas, and have already bought a house in Florida.


The house in Florida is already funded, and I had to sell all my stocks and basically wipe out my savings to pay for the 20% down payment for the home. The new home in Florida is excellent, and I just made my first month's mortgage payment. It's vacant right now because I don't physically move there until next month. Worth noting, I didn't touch any of my retirement accounts or my daughter's 529 of course. But I did basically wipe out my savings and I only have less than $10k to my name right now liquid.





Here's the thing... I'm going to be selling my home in Texas... and it goes up for sale at the end of the week. I owe 196k on the home, and the house will probably sell for $360-370k. My company will also reimburse me for all expenses, including real estate commission (which is very nice).


With all said and done, I will probably end up taking close to $150k in equity that the title company will write a check to me for.



Question I have is... should I put this back into the house I just bought as additional equity (in which case I would pay absolutely NO TAXES on it), or should I invest this money in the stock market? I'm not asking about WHAT I should invest it in... I do pretty well in the stock market and that's a separate discussion... but as I said, I wiped out all my savings and investment money so I could pay for the down-payment.



Can I replenish that money with the proceeds from my house, and consider the money I used as the down-payment? I guess what I'm asking is... I've never sold a house before, and I'm not sure what my options are when I get the pay out.



What kind of taxes am I looking at paying? It doesn't seem worth it to me to put $100k+ towards an interest rate that's 3.125% (the interest rate of the new home I just bought).



Would appreciate any advice or comments, or thoughts... it's a nice problem to have I suppose... and hopefully I didn't make this confusing.



Thank you!!!

 

[82-T/A]

LOL, sorry... I'm not in Fort Lauderdale, that signature is from like 10 years ago.

 

[pjigar]

No federal tax on sale on the primary house if you lived there 2 out 5 years AND has not rented it ever. If partially rented then you have to pay tax on the prorated gain.

As to what to do with the proceed: You tell me! We are in the same boat as you except we only moved 10 miles! We already have funded the next house and have already moved there. I really don't have the answer either since everything seems so over valued. Part of me says hold on to the cash and look for better investments when prices go down. But part of me says I don't need this money for next 5-10 years so just invest in broad market and be done with it. I still haven't made up the mind one way or the other.

 

[82-T/A]

No federal tax on sale on the primary house if you lived there 2 out 5 years AND has not rented it ever. If partially rented then you have to pay tax on the prorated gain.

As to what to do with the proceed: You tell me! We are in the same boat as you except we are only moved 10 miles! We already have funded the next house and have already moved there. I really don't have the answer either since everything seems so over valued. Part of me says hold on to the cash and look for better investments when prices go down. But part of me says I don't need this money for next 5-10 years so just invest in broad market and be done with it. I still haven't made up the mind one way or the other.

This is fantastic!!! I had no idea! That solves it then! I'm going to slowly put it into the stock market, and hold some of it as cash. Thank you so much, I was almost sure it was going to be taxed. I assume it still gets taxed as income... but no, never rented it out.




Thank you!

 

[pjigar]

This is fantastic!!! I had no idea! That solves it then! I'm going to slowly put it into the stock market, and hold some of it as cash. Thank you so much, I was almost sure it was going to be taxed. I assume it still gets taxed as income... but no, never rented it out.

Thank you!

I should add for completeness sake, gains up to $250K for single filer and up to $500K for joint filters. But we don't even come close in Texas to these numbers, for now any way.

 

[82-T/A]

I should add for completeness sake, gains up to $250K for single filer and up to $500K for joint filters. But we don't even come close in Texas to these numbers, for now any way.

Thank you, yes... and in this case, I'm likely to walk away with ~$150k... plus, it says I can claim the $55-60k I spent on renovations over the past 4 years... which I have all the receipts for.


This is fantastic news... I really appreciate it. I looked it up because it almost didn't seem believable and it's just as you said.

 

[82-T/A]

FYI to everyone on this... just wanted an update.


I sold my house in Texas, and the net proceeds from the home (after real estate fees, etc.) was about $183k. Of that, I rolled in about $60k into the next home I'd purchased.



I filed my taxes this year (obviously), and I didn't end up having to pay any taxes on the proceeds from the home that I sold. This was something I was concerned about... but as you guys said, it wasn't an issue.

 

[OldShooter]

You are dealing with fungible money. It doesn't know where it came from or anything about your housing finances. Figure out an overall investment strategy including your retirement accounts, then invest the house sale balance dolllars to suit the strategy. If you don't have one, writing an investment policy statement might be an illuminating exercise. You might also consider consulting a good financial planner who will work with you on a fee-for-services basis.

 

[Koolau]

You are dealing with fungible money. It doesn't know where it came from or anything about your housing finances. Figure out an overall investment strategy including your retirement accounts, then invest the house sale balance dolllars to suit the strategy. If you don't have one, writing an investment policy statement might be an illuminating exercise. You might also consider consulting a good financial planner who will work with you on a fee-for-services basis.

+1 What OldShooter said.

Pick a strategy, fund it with your cash, stay the course (unless you find you don't sleep at night - then change it so you can sleep.) But remember that YMMV.