Should I sell my co-op - bank the profit - and save up for the house I really want?I'm in NY and things are sky-high. Is there any harm of putting the money in savings - watching it grow - an dmove into a house in a year or two?? | |
Should I sell my co-op - bank the profit - and save up for the house I really want?I'm in NY and things are sky-high. Is there any harm of putting the money in savings - watching it grow - an dmove into a house in a year or two?? | |
If you sell now you may be able to exclude the gain form taxes, up to $250,000 if single or $500,000 if married filing a joint return. You must have lived in it for at least 2 of the 5 years prior to the sale to qualify for the exclusion.
If the value of your place is still climbing and your gain is still less than the above amounts it might make sense to hang on to if for now since if you put the proceeds in the bank ALL of the interest you earn will be fully taxable as ordinary income. Even if your gain exceeds the exclusion amounts, any excess gain will be taxed at a lower rate, usually 15%.
On the other hand, if values have started to fall, now might be a good time to jump ship and hang on to what you have in the hope that you'd be able to afford something better or cheaper in a year or two.
Don't forget that you'll be hard pressed to get more than 5% in ordinary savings and most banks are paying less than that. If property vaues are still rising at anything more than 5%, your best place is right where you are right now.
Yes, there's lots of harm in it. You live in NYC! Your money will grow at a measly 3-4% in a savings account while it's growing at 20% in equity in your co-op. If you want to sell and do something with the money, invest it in something way more lucritive than a savings account such as tax liens, which yield 10-15% or even a CD will give you 8%.
Before you do anything, check on the tax ramifications of failing to re-invest the proceeds.