Should I sell my stocks to put a down payment on a house before it becomes a long term investment?
everyone! Just as the post describes, I'm caught between 2 decisions. Right now I have 10.6k invested in stocks, which I bought last August, that are worth 19.5k. I planned to use these profits to help with a down payment for my first home, but that was before I recently learned I would be taxed 15% for short term investments. My specific question is, should I sell my stocks, take a 15% hit on the profits, buy a house, and hope the deductions from a ~200k home outweigh the 15% tax? Or should I wait 'til September, let the stock grow some more, and save the 15%?
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In the United States Short-term capital gains are taxed at rates similar to regular income which is 25% if you make less than ,000 and 28% if you make more than that but less than 0,000. If you make more than 0,000 then the rate is 33%. If you hold the stock for a year or more than the tax rate is 15%, unless your income is less than ,000 in which case there is no tax on long-term gains.
As a general rule, the way to make money is to stay out of debt, so I cannot advise you to assume a mortgage. Financially you are better off investing your money. Much like you I bought a house with a mortgage using about ,000 in a down payment about 20 years ago and I paid it off a few years ago. If I had to do it over again, I would have bought a shack (a steel building) for ,000 and lived in that and invested my income. If I had done that, I would be about 0,000 richer today than I am now.
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