| I want to be smart with this money, help !!!! |
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abetterme
New Poster
Cash: $ 0.45
Posts: 2
Joined: 15 Nov 2004
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| I want to be smart with this money, help !!!! |
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My spouse and I are making an out of state move. We have sold our house and made good money but unfortunatley already have a large amount of debt, so much that the money from the sale wouldn't even cover the debt. Neither of us are very disciplined or finance "savvy", hence the debt, and I don't want to screw up again now that we have a chance to clean up some. We are going to be staying with a relative for about a year or two so we won't be purchasing a new house anytime soon. We were going to put the money in a cd until we were ready to purchase our next house but then started talking about paying my car off so that we wouldn't have the burden of two car payments and the money sitting in a cd would not have much interests gain compared to the amount of interest we are paying on the car, dilemma, if we pay the car off then we will only have a few thousand left in savings, and we will have to pay taxes on the money if I pay my car off - right ? What do we do? Would we pay taxes still even with it being in a cd ? Is this capital gain taxes ? Do we Put all the money in a cd and hope that in a year or two we actually get a house and not take the money out (like I said shamefully, we are not disciplined and have screwed up in the past) , or do we pay the car off and worry about paying taxes ??? We are a younger couple and have started a family, I really need and want to get straightened out financially and not repeat past mistakes. Please help !!!
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Mon Nov 15, 2004 3:53 pm |
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xboxundone
Senior Member
Cash: $ 67.83
Posts: 796
Joined: 19 Sep 2004
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either way you will have to pay taxes.
Always ALWAYS ALWAYS pay off your debt.... What is the point of saving money if your debt it pilling up. As where is stands right now i bet your debt's interest is MUCH higher than what you could even dream about making with a CD. Pay off as much debt as you can but keep a couple thousand just for rough times.
Thats my 2 cents.
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Mon Nov 15, 2004 5:20 pm |
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BlankenshipFP
Money Talk Advisor
Cash: $ 79.56
Posts: 390
Joined: 05 Oct 2004
Location: Illinois
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Okay just a second -
Let me make sure I understand what you're asking:
You made a gain on the sale of your home. Your question is: are you going to have to pay tax on that gain?
Three things determine whether or not there is tax to pay on the gain from the sale of a home. 1) length of ownership; 2) use of the home; and 3) amount of gain.
If you owned the home for five or more years, and during that time you lived in the home for two years and considered it your primary residence, then your gain may be exempt from tax, up to $250,000 ($500,000 for joint filers).
If this answers your question, let me know. If not, please try to re-state the question and I'll give it another run.
Hope this helps -
Jim Blankenship, CFP®, EA
Blankenship Financial Planning, Ltd.
www.BlankenshipFinancial.com
Standard IRS Circular 230 Notice Applies
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Tue Nov 16, 2004 5:04 pm |
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abetterme
New Poster
Cash: $ 0.45
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Joined: 15 Nov 2004
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Yes, this answered the question on taxes. Thank you. I appreciate the responses.
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Tue Nov 16, 2004 10:47 pm |
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domskynetlabs
Full Member
Cash: $ 21.09
Posts: 95
Joined: 24 Nov 2004
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If you make proifit from the sale of property and plan to buy another piece of property a 1031 exchange is a great way to defer taxes
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Wed Dec 22, 2004 8:11 pm |
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