Is it smart to sell stock to buy a house?

Yes, in many cases selling stock for a down payment on a house is a smart move. Generally speaking, the only investment that performs better than the stock market is real estate. But remember that the IRS taxes capital gains, including stock sales. Determining whether selling stocks to buy a house makes sense for you will depend on how big your tax bill is.

Do you pay capital gains if you sell stock to buy a house?

Typically, you'll have to pay tax on capital gains if you sell stock to buy a house . The amount you pay (if any) depends on a number of factors. For example, holding stocks for more than a year will lower your tax bill. On the other hand, if you’ve held the stocks for under a year, you’ll most likely have to pay short-term capital gains, which are higher. But if you’ve lost money on your stocks, you can write off the investment losses, which will lower your tax bill. Another factor is your marginal tax bracket. If it's less than 15%, you may not have to pay tax on your stock sales.

Can you take money out of a mutual fund to buy a house?

Yes, you can take money out of your mutual fund to buy a house. But just like with the sale of other stocks, you’ll likely have to pay tax on the withdrawal. Also, check with your financial institution first about any fees you’ll face for withdrawing. Some institutions, for example, charge fees if you withdraw from your fund less than a year after purchase, while others charge a maintenance fee if your funds fall below a certain threshold.

Amber Taufen, Author at Clever Real Estate

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