Former active duty, current civilian. I am about 1.5 – 2 years out from purchasing a home with a VA loan (funding fee waived) in a HCOL area where any home in a safe neighborhood is $750k or more. I am leaning towards putting about 10% down (I’m open to reasons why I shouldn’t put anything down).
I have about $100k saved in a house fund sitting in a brokerage account in a S&P 500 index fund.
I know it is risky having this in the S&P 500 being this close to buying a home, so I want to transfer it somewhere safe. How would you recommend making this transfer? Lump sum to a HYSA? DCA $10k per week over time? Or should I even transfer it at all since I have the VA Loan? Thank you.
They are long term capital gains. I put a majority of this in during 2022 and 2023, so the market went up. I figure the $100k will actually be roughly $85k after taxes (long term capital gains tax rate of 15% and my salary of $125k).
Also, I currently make $125k for a salary. I will be getting a promotion to 150k in January. Any tips on how this impact the timing this?
House fund sitting in brokerage account 1.5 – 2 years out
byu/Forest263 inMilitaryFinance
Posted by Forest263
4 Comments
I would transfer it. If rates go below 5% then I would consider holding on to a bit and tossing the rest back in the market, depending on your risk tolerance
I would just stick it in your settlement fund, but remember that it will be a taxable event. Consider where your income is this year and next year and how much of it is less than a year old and game it out that way. Capital gains is much more forgiving than income tax
Depends on your risk tolerance and tax situation.
First, consider taxable gains. Do you have gains on the money invested in SP500? Are they long term or short term? Do you want that tax hit now?
If it were me, and it isn’t, I am comfortable with the risk if I can afford a zero down loan. I’d let it ride in the market knowing there are 3 outcomes possible:
1. It is worth more money. I can decide if I was to use the money for a down payment considering I may owe taxes on it.
2. It is worth the same amount of money. Market traded sideways. No further gains. Any gains I have are long term with better tax treatment.
3. It is worth less money. I can afford zero down on the house. Maybe I want to tax loss harvest, maybe I don’t. I’ll make that decision when I get there.
2/3 of those outcomes aren’t bad. All 3 let me decide when to take any tax hit (or benefit) when I want. I still have the option to use or not use the money for a down payment. I didn’t miss out on market gains if they occur.
Good luck.
Depending on where you have the account and how much you have total in the account you might be able to do a securities backed line of credit. It could save you from the taxes but you would have to pay yourself back plus interest eating away at you monthly spending amount.
With a $150k income, you may HAVE to put down 10% or more just to get approval for a $750k loan. While the VA loan doesn’t require a down payment, you still need the income to qualify and without a down payment, you won’t likely qualify for the full $750k. I’d suggest finding out how much you will actually get approved for and working backwards from there to determine what to do with the money you have saved up and how to allocate future savings if necessary.