What would you do? Cash from a property - Vintage Mustang Forums
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post #1 of 19 (permalink) Old 06-17-2019, 10:40 AM Thread Starter
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What would you do? Cash from a property

The wife and I expect to sell our former residence to the son and his wife. It's been a rental for nearly ten years. They've been in it for two.

We'll net a pretty good bit of dough from it, but not quite $100K. Part of the cash will be used to build a small house in the Philippines. Where would you put the rest?
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post #2 of 19 (permalink) Old 06-17-2019, 10:48 AM
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Just ask Mr. White aka Heisenberg!!

Joking aside, I assume you will incur some capital gains (we do up here in the great white north), so I would let the dust settle before locking it in a long term investment.
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post #3 of 19 (permalink) Old 06-17-2019, 11:22 AM
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Part of the cash will be used to build a small house in the Philippines.
Why? That sounds like a disaster waiting to happen under so many different scenarios I can imagine that I couldn't even list them all.
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post #4 of 19 (permalink) Old 06-17-2019, 11:25 AM
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I'd make a nice dent in my student loans if someone would give me 100k.
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post #5 of 19 (permalink) Old 06-17-2019, 11:30 AM
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Depends on your financial situation.

If you're in a lot of debt (but I'm guessing not) I'd pay that off.

If you're a little behind for whatever age you are in terms of retirement, a 30-50K investment added to what you already have can make some quick gains.

...and you only live once, I'd take 5K or so and have a really fun 10 day vacation somewhere.
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post #6 of 19 (permalink) Old 06-17-2019, 12:04 PM
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Pay off the house you live in ( if you haven't already) No house payment at retirement age is a real plus.

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post #7 of 19 (permalink) Old 06-17-2019, 03:14 PM Thread Starter
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Why? That sounds like a disaster waiting to happen under so many different scenarios I can imagine that I couldn't even list them all.
Because my wife, Rose, is from there and owns property there. And her family is there and We'll probably live there, part-time, when we retire.
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post #8 of 19 (permalink) Old 06-17-2019, 04:25 PM
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I would consult a financial planner. There will be tax implications. I lived at Clark Air Base in 68-69, I was a kid but have fond memories of the beaches at Subic and the mountains at Baguio.

When we first arrived, we had to live off base. I was cutting through a cafe on my way home one day and the bar tender pointed to a TV and said "Look, Neil Armstrong is stepping on the moon". I will always remember seeing the first moon walk and it was by chance.

Lots of Americans live in the Philippines, for the most part, we like them and they like us. As a kid I remember seeing many portraits of Douglas MacArthur in businesses and homes. They were very pro-American in those days.
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post #9 of 19 (permalink) Old 06-17-2019, 05:06 PM
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Since it is a rental and not your primary residence the entire profit against your cost basis is subject to income tax and potentially capital gains tax.


I'd be looking at a 1031 exchange. You can the get creative with refi's and get your money right back....
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post #10 of 19 (permalink) Old 06-17-2019, 07:25 PM
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Since it is a rental and not your primary residence the entire profit against your cost basis is subject to income tax and potentially capital gains tax.


I'd be looking at a 1031 exchange. You can the get creative with refi's and get your money right back....
Any gain above the cost basis will be taxed as long-term capital gain, not income. Good news is thatís likely a 15% tax rate, unless youíre a real baller and in the top tax bracket. If youíre on Medicare Part B, this will count as income and could screw up your premiums in two years. The 1031 exchange is a good idea, but youíd better get going if thatís the plan. There are things called Delaware Statutory Trusts where you can commingle your money with other investors and a manger, so you donít have to deal with the day to day nonsense of being a landlord. Talk with your CPA to determine your taxable gains before making any decisions on what to do with the money. Hopefully youíve been depreciating the property while itís been a rental. Then think about visiting with a Certified Financial Planner. Good luck!
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post #11 of 19 (permalink) Old 06-18-2019, 07:33 AM
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If you would like to talk this though, PM me and Iíll be happy to talk with you. As a CFP, this is my wheelhouse. Iíve gotten so much from this community and Iím glad to be able to help.

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post #12 of 19 (permalink) Old 06-18-2019, 08:39 AM
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If you do not have investment experience, I'd speak with a financial planner as well as a CPA for the tax implications.

Otherwise, if you have outstanding debt, pay that off. I'm not sure how old you are but, if you're on the younger side (under say, 45) and your mortgage interest rate (if you have one) doesnt suck I would invest it. The ROI will likely outpace your mortgage. If you're on the higher side of age, pay off the house and invest the rest.

But seriously consider talking to an FP (and message @Quicksilver66).
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post #13 of 19 (permalink) Old 06-18-2019, 09:16 AM
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I would pay the taxes on the windfall and divide the remains into 3 roughly equal portions.

1/3 would go to retirement saving that could be used in the future towards your retirement home expense.
1/3 would go to reducing current debt (if you have any), such as car loans, credit card, etc.
1/3 would go into "current lifestyle" to buy furniture, appliances, take a vacation, etc.

I actually think that last one is really important, because none of us came with a warranty. I'm not a "spend it all" as soon as you get it by any means, but I'm also not saving it ALL for that mythical day when I RETIRE and can DO ANYTHING. I've seen too many friends not make it to that date. I've seen others make it to that date, but their health is so poor they can't get out and do what they dreamed of doing.

So....that's what I would do.

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post #14 of 19 (permalink) Old 06-18-2019, 11:14 PM
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Economics is a fascinating subject to me.

More later.


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post #15 of 19 (permalink) Old 06-19-2019, 06:44 AM
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Seriously guys, CPA - Lets get real; I would start with a 408 and dual exhaust, dial in the suspension, cool rims with sticky tires - cool seats, fun steering wheel and rumble mufflers - then take that rig on the road...


...pay off loans - SHEEEESH... I don't come here for sensible advice, lets rumble!
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