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.

Thomas O'Shaughnessy

VP Marketing

Tommy O’Shaughnessy has been part of the Clever Team for over five years. Tommy created Clever’s PR and Research department in 2018. His team puts together in-depth research about the real estate market, mortgages, and consumer finances. Tommy’s research and writing can be found on publications like National Mortgage News, CNBC, Business Insider, and Inman.

Expertise: Home buying and selling costs, real estate commission models, cash home buyers, and housing market trends.

Education: BA Journalism, Magna Cum Laude - University of Missouri, Columbia Journalism School

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