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Question about using fund to pay mortgage
11-04-2004, 02:17 PM
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#1
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Thinks s/he gets paid by the post
Join Date: Jul 2004
Posts: 1,434
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Question about using fund to pay mortgage
We owe $18,000 on my mortgage. My husband suggested that we sell a mutual fund to pay off the mortgage. The fund is worth approximately what it was bought for in 1996 ($20,000). This was an after-tax purchase. If we did this, he would be able to maximize his retirement contributions, do catch-up and reduce our taxes. It makes sense to me but I am always afraid there is something I do not know. Will I owe taxes on the fund if it earned no money? Is this a good idea? 
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Re: Question about using fund to pay mortgage
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11-04-2004, 05:27 PM
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#2
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Thinks s/he gets paid by the post
Join Date: Dec 2003
Posts: 1,375
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Re: Question about using fund to pay mortgage
 Quote:
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We owe $18,000 on my mortgage. My husband suggested that we sell a mutual fund to pay off the mortgage. The fund is worth approximately what it was bought for in 1996 ($20,000). This was an after-tax purchase. If we did this, he would be able to maximize his retirement contributions, do catch-up and reduce our taxes. It makes sense to me but I am always afraid there is something I do not know. Will I owe taxes on the fund if it earned no money? Is this a good idea?
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If you purchased your fund in 1996, and it is worth about the same today, you would probably qualify for a long term loss. (Outside of a qualified plan, you would have been paying dividends & Cap Gains as you went along).
Regards, Jarhead
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Re: Question about using fund to pay mortgage
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11-04-2004, 06:36 PM
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#3
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Recycles dryer sheets
Join Date: Oct 2004
Posts: 52
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Re: Question about using fund to pay mortgage
Looks like three birds with one stone:
-mortgage free
-reporting a loss on the sale should reduce income tax liability
-more income available to direct towards tax favored savings
As long as there are other liquid funds availabe in case an unexpected emergency arises, I wouldn't hesitate.
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Re: Question about using fund to pay mortgage
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11-07-2004, 02:54 AM
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#4
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Thinks s/he gets paid by the post
Join Date: Jul 2004
Posts: 1,434
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Re: Question about using fund to pay mortgage
Thanks, you guys are the best. I have been one of those inadequate visitors (reading, not posting) for awhile.
Sigh, how do I know if I have a "qualified" plan?
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Re: Question about using fund to pay mortgage
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11-07-2004, 05:58 PM
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#5
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Recycles dryer sheets
Join Date: Oct 2004
Posts: 52
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Re: Question about using fund to pay mortgage
Quote:
Sigh, how do I know if I have a "qualified" plan?
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Qualified is analogous to tax-deferred. ie. 401K, IRA, etc.
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