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Thread: What to do with cash from sale of home

  1. #1
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    What to do with cash from sale of home

    Our house is on the market and we are planning to move from the Midwest to a warmer climate for a year to see if we like it. Any advice on where to park the money once the house is sold?

    Since the money needs to be liquid, I don't want to tie it up in stocks and bonds. I was thinking money market, but those are not insured. I need the money to be safe and liquid so when we are ready to buy another house it will be immediately available.

    I may need to sacrifice a good interest rate for security.

    What are your thoughts? What would you do?

  2. #2
    Senior Member Tradd's Avatar
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    Don’t you have to pay some sort of capital gains tax if it’s not put into another house within a certain time period? I’m probably wrong, though.

  3. #3
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    Quote Originally Posted by Tradd View Post
    Donít you have to pay some sort of capital gains tax if itís not put into another house within a certain time period? Iím probably wrong, though.
    I have no idea - will have to check on that.

  4. #4
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    Found this on the NOLO website. We should be ok.

    "If you sell your home, you may exclude up to $250,000 of your capital gain from tax -- or up to $500,000 for married couples."


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    And this is such a big area with the potential for a big mistake due to new tax laws, check it out with experts if you have a question. IRS website is not set up for future planning. So far, it looks like the new law retained the tax law shown above. https://www.nar.realtor/tax-reform/t...e%20Homeowners

  6. #6
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    There can be confusion about what financial products have FDIC or NCUA (credit union) deposit insurance. The websites of these agencies give information and have online calculators you can use to learn what the insured amounts of various types of deposits would be.
    Briefly, a "Money Market Mutual Fund" (typically offered by a broker-dealer or mutual fund distributor) does NOT have deposit insurance. Banks and credit unions may offer a "Money Market Deposit Account" or "Money Market Savings Account" which is insured by FDIC or NCUA, as the institution invariably will state. The limit of insurance is $250,000 per depositor, per institution. A jointly owned savings account with 2 owners would have a $500,000 limit on deposit insurance.

    In addition to FDIC & NCUA deposit insurance, some institutions have private deposit insurance … and since relatively few customers deposit more than $250,000, the institutions don't advertise the fact, but if you ask the banker, she should be able to tell you if there is private deposit insurance that goes beyond the FDIC/NCUA limits.


    If it looks like the deposits would exceed the insurance limits at one institution, then it would make sense to open accounts at more than one institution. (W. C. Fields had approximately 700 accounts in various fictitious names … Patriot Act would not allow the fictitious names today.)


    To see the most competitive deposit rates I use bankrate.com "Savings/Money Market". Last l time I looked at the top of the heap were:

    1.86% Radius Bank High Yield Savings, minimum $25,000. Bank founded in Boston, 1987. There are 2 physical branches in Boston. Corporate strategy is to grow rapidly by partnering with fintech startups.

    1.85% CIT Bank Money Market Account, minimum $100. Access is via "People Pay". Founded in Salt Lake City, 2000.

    1.75% Synchrony Bank High Yield Savings, zero minimum. Founded in Draper, UT 1988, as a spin-off of the credit card business of GE Capital. In 2014 entered into a consent decree with CFPB to pay $225 million to settle allegations of deceptive and discriminatory practices.


    With high yield savings or money market savings, you would have high liquidity, and there would be the possibility of the institution raising or lowering the APY paid on your account. However, if you are fairly certain there will be a number of months before you would decide to buy your next house, then a CD might be available at a higher APY, with an unchanging APY. For instance Synchrony is offering a "Special 14 month CD" with 2.35% APY.
    Last edited by dado potato; 6-16-18 at 2:22pm.

  7. #7
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    I thought you had 2 years to invest in another house. Where are you thinking about going?

  8. #8
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    Teacher Terry: You only need to live in the house as a personal residence for 2 years (very general rule). Then the gain up to the limits is excluded with no future requirements. No need to reinvest in any any particular time period. But the holding period and use for the house being sold is important.

  9. #9
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    I would put the money in cd's for a year and rent in the new area. Ally is paying 2.15% now. You may find money market for more than that, don't know.

  10. #10
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    Thanks sweetana, I did have the 2 confused

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