retire48in2018
Recycles dryer sheets
- Joined
- Mar 12, 2008
- Messages
- 363
How much scenario planning do you do?
There are different actions that I would take depending on what (if any) of the 2017 tax changes remain after 2026.
For example - the difference in standard deduction and rules on deductions - from 2017 to 2026 shifts strategy away from a high mortgage and property tax. How much of a new home (and/or mortgage) is a consideration when we move to our retirement location - especially from a budget planning perspective.
Another example - the 0% capital gains tax rate strongly pushes towards resetting cost basis each year in brokerage account vs post 2026 a push towards Roth conversions.
There are other strategies as well.
Many are typical tax minimization strategies.
However - some are larger decisions that go beyond a 1-year tax minimization horizon (like $ amount of new home to pursue and/or mortgage with tax implications). This might be a $400k home vs $800k home, for example.
Generally, we have tried to take the most conservative path - not depending on certain tax changes. But, then you might miss on real long term opportunities (like a home, brokerage capital gains vs Roth conversion, etc)
So, how do you scenario plan and make these type of decisions?
There are different actions that I would take depending on what (if any) of the 2017 tax changes remain after 2026.
For example - the difference in standard deduction and rules on deductions - from 2017 to 2026 shifts strategy away from a high mortgage and property tax. How much of a new home (and/or mortgage) is a consideration when we move to our retirement location - especially from a budget planning perspective.
Another example - the 0% capital gains tax rate strongly pushes towards resetting cost basis each year in brokerage account vs post 2026 a push towards Roth conversions.
There are other strategies as well.
Many are typical tax minimization strategies.
However - some are larger decisions that go beyond a 1-year tax minimization horizon (like $ amount of new home to pursue and/or mortgage with tax implications). This might be a $400k home vs $800k home, for example.
Generally, we have tried to take the most conservative path - not depending on certain tax changes. But, then you might miss on real long term opportunities (like a home, brokerage capital gains vs Roth conversion, etc)
So, how do you scenario plan and make these type of decisions?