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re: Need advice using non-retirement brokerage funds to potentially purchase home
Posted on 6/25/25 at 10:18 am to TorchtheFlyingTiger
Posted on 6/25/25 at 10:18 am to TorchtheFlyingTiger
quote:
If my math is right, zero LTCG rate applies to married/joint up to $97600 plus $30k standard deduction = up to $127,600 taxable income
I just want to add that this would be for federal taxes and OP should consider state taxes that would be owed for the gains. Assuming that would be taxes for Mississippi, gains would be taxed as regular income at a rate of 4.4% in 2025 and 4.0% in 2026.
0
Posted on 6/25/25 at 10:20 am to TorchtheFlyingTiger
So we make around $300k a year filing jointly so am I correct we wouldn't qualify for that?
Posted on 6/25/25 at 10:21 am to TorchtheFlyingTiger
quote:
If my math is right, zero LTCG rate applies to married/joint up to $97600 plus $30k standard deduction = up to $127,600 taxable income
Correct. So effectively you can avoid CG as long as your income for the year is below these #'s. More so useful in retirement when you don't have another source of income.
A good reason to not sell in your taxable account until you are ready to retire. Use a HYSA or MM for any purchases in the meantime.
Posted on 6/25/25 at 10:42 am to Civildawg
quote:
we make around $300k a year filing jointly
You're likely looking at 15% LTCG plus 3.8% NIIT and state taxes in that case. The other methods may work for you at some point to avoid LTCG.
On other hand, if you have positions you need to divest (too concentrated in those 10 baggers for instance) that might be a case for realizing some gains now.
Posted on 6/25/25 at 10:54 am to Civildawg
How I think about it…
(Context; I favor using other people’s money to make money)
I would compare cost of using non-retirement brokerage funds (taxes, opportunity cost and bridge period cost) to cost of mortgage (6.5%), as follows:
Non-retirement brokerage funds
Tax (LT and ST on realized gains) = ?
+
Opportunity cost (earnings foregone) (if greater than 6.5%, ask yourself why give up the wealth-building positive spread over mortgage cost)
+
Cost of concurrent mortgages = home1 mortgage payments during time period before sell home1 = ?
Cost1 = sum ?s (above)
Versus using home1 equity via no contingency.
As I type, have full amount of cash in a non- retirement brokerage account to payoff mortgage in-full tomorrow if wanted to.
Earning 10-12% (3-5 yr avg returns)
It would take early 1980’s mortgage interest rates to justify my using these funds for home. Wealth-building positive spread is just too large.
Good luck! And congratulations on family growth. Trust me, your future selves will need the wealth build for the little rascal(s) down the road.
(Context; I favor using other people’s money to make money)
I would compare cost of using non-retirement brokerage funds (taxes, opportunity cost and bridge period cost) to cost of mortgage (6.5%), as follows:
Non-retirement brokerage funds
Tax (LT and ST on realized gains) = ?
+
Opportunity cost (earnings foregone) (if greater than 6.5%, ask yourself why give up the wealth-building positive spread over mortgage cost)
+
Cost of concurrent mortgages = home1 mortgage payments during time period before sell home1 = ?
Cost1 = sum ?s (above)
Versus using home1 equity via no contingency.
As I type, have full amount of cash in a non- retirement brokerage account to payoff mortgage in-full tomorrow if wanted to.
Earning 10-12% (3-5 yr avg returns)
It would take early 1980’s mortgage interest rates to justify my using these funds for home. Wealth-building positive spread is just too large.
Good luck! And congratulations on family growth. Trust me, your future selves will need the wealth build for the little rascal(s) down the road.
Posted on 6/25/25 at 11:54 am to Civildawg
You could trim losers and small gainers from the stock portfolio and maybe this will balance out to no gain.
Of course, you might could trim part of a big winner position against losers.
Sounds like you can buy the house outright, but a mortgage might be advantageous to you.
You’ve got a first world problem. Sounds like you’ve done well in the markets.
Of course, you might could trim part of a big winner position against losers.
Sounds like you can buy the house outright, but a mortgage might be advantageous to you.
You’ve got a first world problem. Sounds like you’ve done well in the markets.
Posted on 6/25/25 at 12:46 pm to Civildawg
I'm a financial DIY'er but this calls for a financial advisor and/or CPA to help you analyze, understand and optimize. Given $300k income and a large financial decision plus sitting on gains from multiple 10 baggers that you likely want to diversify out of at some point soon, I would seek some professional advice. They can also help you with tax and asset allocation strategies moving forward. I'd try to find one that charges a flat fee for service not percent of assets and wouldnt let them manage the portfolio.
This post was edited on 6/25/25 at 5:54 pm
Posted on 6/25/25 at 2:11 pm to Civildawg
With that much money in a taxable brokerage account, I would just get a new mortgage. I would then do tax loss harvesting or even margin loans to pay the payments each year while minimizing the taxes paid, sort of like you will do when you retire. Then, if there is some future opportunity to refinance to a lower rate (doubtful, but it can happen), you could get a lower rate and make the math work better. Mine is 2.625%. I will be holding that one for a while.
However, it isn't always about the math. Peace of mind matters a lot. From the numbers you gave, I think you will do fine regardless.
However, it isn't always about the math. Peace of mind matters a lot. From the numbers you gave, I think you will do fine regardless.
Posted on 6/25/25 at 2:12 pm to Civildawg
Everyone’s situation is different.
I personally would sell the assets in the brokerage account in the most tax efficient manner and pay cash for the home and improvements. Also save your receipts for the capital improvements to raise your basis for when you sell down the road.
Also, just my 2 cents, but if I was the home seller, I wouldn’t enter into a contract with a Home Sale Contingency.
Good luck!
I personally would sell the assets in the brokerage account in the most tax efficient manner and pay cash for the home and improvements. Also save your receipts for the capital improvements to raise your basis for when you sell down the road.
Also, just my 2 cents, but if I was the home seller, I wouldn’t enter into a contract with a Home Sale Contingency.
Good luck!
Posted on 6/25/25 at 3:01 pm to Civildawg
quote:
Correct. I will say most of the stocks I have will be subject to long term taxes and not short term
Can you do enough tax loss harvesting to avoid paying anything on gains? Sell all your losers and some of your winners? I think taking out as much as you can w/out paying taxes on gains is a good move.
Posted on 6/25/25 at 3:28 pm to notsince98
quote:
I think taking out as much as you can w/out paying taxes on gains is a good move
What about the opportunity cost (foregone return on these funds)? These may be higher than the tax cost, no?
Posted on 6/25/25 at 3:42 pm to Artificial Ignorance
One has a guaranteed return, the other does not. Dont be greedy.
Posted on 6/25/25 at 4:25 pm to makersmark1
I think what you suggested would be the best course. I really appreciate everyone's thoughts and opinions on this. I also will, like someone suggested, try to hire a financial advisor to take a look at my situation
Posted on 6/25/25 at 5:19 pm to Civildawg
Don't sleep on @CharlesUFarley 's advice.
Unless you are very risk averse why would you want to put more than necessary tied up in paid for home instead of working for you for decades? Growing family so I assume you are still fairly young and cash flow shouldn't be a problem earning $300k. If there is any chance that growing family might lead to a reduced household (so you and/or spouse can have more time for family for instance) income at any point that may be another window to pat lower LTCG.
Unless you are very risk averse why would you want to put more than necessary tied up in paid for home instead of working for you for decades? Growing family so I assume you are still fairly young and cash flow shouldn't be a problem earning $300k. If there is any chance that growing family might lead to a reduced household (so you and/or spouse can have more time for family for instance) income at any point that may be another window to pat lower LTCG.
This post was edited on 6/25/25 at 5:20 pm
Posted on 6/25/25 at 5:51 pm to Civildawg
I would be VERY careful about letting go of assets in the name of reducing debt at this moment in time. The decision could have pretty radical implications on your future financial wellbeing.
Posted on 6/25/25 at 6:59 pm to notsince98
quote:
One has a guaranteed return, the other does not. Dont be greedy.
Risk / Return appetite and time horizon matter. Sounds like OP has plenty of all given:
Risk appetite - these are individual stocks in the account (by their nature)
Return - has experienced high return (by nature of OP’s dilemma)
Time - starting a family so runway length is long.
These are great conditions for using mortgage to keep OP’s money invested for positive spread wealth building.
Never bet against human greed over time. Not mine. The market’s.
The only guarantee that I see in your advice is killing wealth building! Kidding.
This post was edited on 6/25/25 at 7:05 pm
Posted on 6/26/25 at 8:00 am to Artificial Ignorance
quote:
These may be higher than the tax cost, no?
What tax cost? I said I think I would only pursue it if tax loss harvesting was an option to get out of some losers while cashing in on some winners and coming out with 0% tax liability. 0% taxes and 6.5% guaranteed return and a more diversified portfolio.
The guy already said brokerage was just fun money. It can become gambling money real quick.
Posted on 6/26/25 at 1:40 pm to notsince98
quote:
0% taxes and 6.5% guaranteed return.
And highly likely foregoing greater than 6.5% return, in so doing, across same mortgage term. Quite possibly significantly higher!
Keep the option to cash out non retirement brokerage funds at any point in future. Biggest gamble here is to OP’s wealth building.
Always respect the Peace of Mind thinkers. I sometimes find it hard to fathom the one size fits all approach (no consideration of the long time horizon, risk / return appetite as I am interpreting here).
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