Ask Terry Questions How best can I reduce my tax burden and invest money from a home sale

How best can I reduce my tax burden and invest money from a home sale

By Terry Savage on January 17, 2025 | Financial Planning / Retirement

I am 67 and retired and am currently living off 25k in severance money but have roughly 170k in an IRA with a 60/40 mix of stocks and mutual funds and am trying to hold off as long as possible before taking SS.
I share ownership in a home with my brother, we plan to sell our house in a couple months and go our separate ways.
I should clear approximately 300k after selling and I am trying to determine how best to invest that money while reducing my tax burden?

Terry Says

Wait, is the home your primary residence? If so, then you have a $250,000 capital gains exclusion, and likely will face no taxes.
But if it is not your primary residence, and purely an investment, then you will have to determine your cost basis — purchase price, plus anything you put into improving the residence.
And on the outside chance it is an inheritance, you gain is limited to the increase in value since the date of death. If that was recently, then there is no gain. Since the “cost” value of an inherited property is the value on date of death.

So without knowing that, I can’t advise on the tax implications. But let’s say you do have a net profit of $300,000 after taxes. The next question is “how much are you willing to lose” of that money at this stage of life? If your answer is NONE — as I’m guessing it will be — then you can put most of it in Treasury Bills — 6 month duration.
Read this: https://www.terrysavage.com/t-bills-beat-cds-2/

Now, it strikes me this is a good time for you to do some holistic financial planning — not just for this money, but for your retirement income, taxes, and even some estate planning for what’s left over — or for your eventual long term care needs. For that, I’d suggest you read this: https://www.terrysavage.com/pam-krueger-wealthramp/

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