We live in Northern Virginia. We are married with one daughter and have a joint income of $170,000. We both max out our 401Ks. Our "profit" from selling the house would be about $200,000. This is our first house and we've been here for 5 years. (If we do this, we would live in my parent's second home and only pay for utilities.)
2007-11-25 12:57:31 · 7 answers · asked by BH 2 in Business & Finance ➔ Personal Finance
We live in Northern Virginia. We are married with one daughter and have a joint income of $170,000. We both max out our 401Ks. Our "profit" from selling the house would be about $200,000. This is our first house and we've been here for 5 years. (If we do this, we would live in my parent's second home and only pay for utilities.) We would only do this for 1 to 2 years. Our goal is to save an additional $200,000 in order to have a down payment of $400,000 for a new home in Northern Virginia (as you can see it is really expensive here!)
2007-11-25 13:13:26 · update #1
To the poster that states that you have to reinvest profit from the sale of a home. WRONG!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
You can profit every 2 years $250,000/$500,000 married on the sale of your home (provided that you have lived in it for 2 of the past 5 years).
I live in the DC area, and I'm guessing that you feel that prices will go down. Maybe. However, interest rates are LOW!!! and if you wait to save a few dollars on the price, an increase in interest rates will kill any savings. Lets say that you price a $600,000 home and borrow $450,000. If rates go up just 1%, it will cost you $4,500 more per year.
We have seen prices in NOVA becoming stable and in some areas, increasing.
2007-11-25 13:18:54 · answer #1 · answered by Anonymous · 0⤊ 0⤋
The wording of your question leads me to believe the $200,000 is the difference between what the house will sell for and what you owe. That is NOT your profit. Profit is the difference between what the house sells for and what you paid for it. As a couple that has owned AND lived in the house for 3 of the last 5 years, you can exclude up to $500,000 of gain from your FEDERAL taxable income. I don't know if VA will tax any gain.
To address your question, there is nothing financially wrong with your plan that I can see. We can't know if you SHOULD, only is it is financially reasonable.
2007-11-25 14:41:08 · answer #2 · answered by STEVEN F 7 · 0⤊ 0⤋
Talk to your tax consultant on this... If you don't reinvest within a certain time frame you could take a hit on taxes... But, I think that would be MORE than offset by living in your parent's second home... I would consider invest the money in CD's or something of the sort as an alternative.
2007-11-25 13:13:23 · answer #3 · answered by Anonymous · 0⤊ 2⤋
Crap, if you don't move into your parents home and just pay utilities do you think they might let me live there??????
I'm real clean and know how to fix things :)
2007-11-25 13:10:43 · answer #4 · answered by Anonymous · 1⤊ 1⤋
No...anyone who already has a home is lucky to have one.. keep it...and be greatful for what you have...there are more people on this earth whom are homeless and you are worring about a larger home when you already have one...Interesting!
2007-11-25 13:38:31 · answer #5 · answered by Anonymous · 0⤊ 1⤋
Why would you not move into another home right away?
2007-11-25 13:01:32 · answer #6 · answered by Anonymous · 0⤊ 1⤋
risky business but if you know what your doing i say go for it.
2007-11-25 13:08:58 · answer #7 · answered by one.n.only 3 · 0⤊ 1⤋