I have stocks I received from my father over the years and would like to use it to purchase a home perhaps 2-4 years from now. Should I be selling it over the years to break it up or can I just sell it all as one lump sump before I decide to buy? What are the pros and cons of each approach? Thanks!
2007-08-03 09:34:24 · 4 answers · asked by Rez 3 in Business & Finance ➔ Taxes ➔ United States
Sounds like there are few issues here that are rather complex. Because your issue is a related to a 2-4 year future purchase of home(tax law may change, price of stock may change).
The stock you received, was it a direct issue or is it attached to an entity--for example a estate? Was the stock from all the same company? Is the stock held by you or is the stock held by the brokeage firm? (will be important to determine the purchasing price)
The other issue is the performace of the stock, if the stock is performing very poorly, it may be wise to sell it and convert it into something performing better or if it is stock from various companies--there maybe loses that can offset some of the gain.
Is the stock a high risk stock?
Is the stock in IRA plan?
What is your tax bracket now and your projected tax bracket, and etc?
I would not be doing you a favor by suggesting any course of action, when so many factors are unknown.
Consider consulting a financial planner(one that is a fee service planner not one that gets commissions on selling stock) or a tax planner on this issue that you can provide the information to in detail and they can provide you a few options on courses of action.
I wish you well.
2007-08-03 11:03:47 · answer #1 · answered by oldcorps1947 6 · 1⤊ 1⤋
I take it that you received the stocks while your father was alive. If so, your cost basis on them was his cost basis for buying them. If you got any of them upon his death, then your cost basis in those stocks is how much they were worth when he died. Selling them all now or over time, you will still be taxed at long-term capital gains rate, which would be a maximum of 15% no matter what your tax rate was, but if you are in the 10 or 15% bracket your capital gains tax would be 5% and would be 0% for years after 2007. So by spreading out the stock sales you could potentially pay less taxes then you would by selling them all at once. But then again, you take the chance that the stock market won't crash and that your stocks could be worth less in the future than they are right now. Other thing is by selling all now, you might be able to buy a house without a mortgage.
2007-08-03 09:43:06 · answer #2 · answered by Anonymous · 1⤊ 0⤋
One thing to consider if you're in a 15% bracket or below - unless the law is changed, you wouldn't pay capital gains tax if you wait to sell until 2008. But that bracket would have to apply including the gain on the stock sold, so if there's a lot of gain, chances are you'd be beyond 15% so would still pay.
2007-08-03 10:18:53 · answer #3 · answered by Judy 7 · 1⤊ 1⤋
I would sell it all now, pay the capital gains tax, and then invest in an Roth IRA B, which if this is your first home purchase, you wouldn't have to pay taxes on the gains. Also, because you would pull the whole amount out at the same time, I believe that you only have to pay something like 1% for withdrawl plus an average of 1.71% in fees.
2007-08-03 09:46:58 · answer #4 · answered by Lisa M 5 · 0⤊ 1⤋