Financial optimization for move and retirement

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
Topic Author
Posts: 7
Joined: Wed Feb 01, 2017 12:43 pm

Financial optimization for move and retirement

Post by Golfer68 » Sun Apr 15, 2018 6:07 pm

Hi all, thanks in advance for your help.

Currently 68 and retired last year, single, no dependents. Moving from California to North Carolina for family reasons. In general would like advice on financially how to best move/sell and buy home/manage retirement accounts. Currently own home in California and would like to buy in NC. Some value for me in buying what would be my second home in NC prior to selling in CA for ease of moving and peace of mind. Home in NC will cost $250-$350.

Current Assets (Not including home in CA):
-$475k in IRA 50%/50%, VTSMX/VBMFX
-$100k in employee 401k 50%/50%, VTSMX/VBMFX
-$100k in employee Roth 50%/50%, VTSMX/VBMFX
-$475 in Taxable Account 50%/50%, VTSMX/VBMFX (all long term holdings)
-$12k checking

Home in CA (to sell currently):
-Worth $850k (at a $400k profit from purchase price)
-$320k in principle and interest on mortgage left to pay at 3.25%

Current Income:
-$1980/m social security
-$2750/m in pension (stable company)

My current plan is to sell off $100k (plus tax) from my taxable account, use that for a down payment on the NC home and take out a second mortgage for the remaining `$200k of that house (already aproved at 4.25%). Then sell my home in CA, use the proceeds to pay off that mortgage and with the remaining ~$400g re-invest in a taxable account while continuing to pay monthly mortgage payments on my new home in NC.

In general want to know what the optimal financial plan would be, however specific questions:
1) Is there a break on the CG cost of profit over $250 from my CA if you then buy another house?
2) Would it be worth taking some of the money in profit from the CA home to Roth convert a portion of my accounts?
3) Does it make sense to have a mortgage on my new home to attain the mortgage interest deduction or should I pay that mortgage off once I sell my CA home?
4) How much is it costing me to buy a second house prior to buying my second (peace of mind)?

Thank you so much!!!

Posts: 5497
Joined: Wed Apr 02, 2014 2:08 pm
Location: Fargo, ND

Re: Financial optimization for move and retirement

Post by bloom2708 » Mon Apr 16, 2018 1:10 pm

I would sell the CA house and pay cash. That allows you to leave your investments in place. Selling taxable it is the place to come up with the money if you must buy before selling. Be aware of the gains triggered and set cash aside for taxes owed.

Do you expect your CA house to take a while to sell? Or you just want to have both houses and move slowly?

Renting short term in NC might give you flexibility of determining how much house you need, locations, amenities, family, etc.

If you net $400k, pay cash for $250k. No reason to carry a mortgage. Hassle and no mortgage interest deduction up to the higher standard deduction.

Hopefully a bump for other feedback.
"A Stoic believes they don’t control the world around them, only how they respond--and that they must always respond with courage, temperance, wisdom, and justice." --Daily Stoic

User avatar
Posts: 6015
Joined: Sun Jun 03, 2012 6:32 pm

Re: Financial optimization for move and retirement

Post by Pajamas » Mon Apr 16, 2018 1:13 pm

68 y.o., moving from CA to NC: rent, don't buy.

Posts: 1315
Joined: Wed Feb 21, 2018 3:17 pm

Re: Financial optimization for move and retirement

Post by 02nz » Mon Apr 16, 2018 1:40 pm

In your situation, I would go for simplicity, and that could mean renting a place in NC, both to have more time to find the perfect place, and to make sure that the area really is where you want to stay long-term. A second mortgage, having to manage two places, and possibly traveling back and forth to sell the place in CA ... doesn't seem worth it to me.

As far as I know there's no "break" on the CG beyond the 250K even for buying another house. However, keep in mind that the cost of improvements you've made to the house do count toward the basis and thus lower your tax. While Roth conversions are often a good idea, you probably shouldn't do it in the same tax year as taking the gains on the CA home sale, since those gains will also put you in a higher tax bracket (at least that's my understanding - someone correct me if I'm mistaken). In any case the benefits of Roth conversion are less for you than someone who hasn't yet started taking SS and pension benefits and thus has a lot more zero- and low-tax space to fill.

Topic Author
Posts: 7
Joined: Wed Feb 01, 2017 12:43 pm

Re: Financial optimization for move and retirement

Post by Golfer68 » Mon Apr 16, 2018 7:56 pm

Very helpful all! Really do appreciate the help!

Post Reply