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Personal Finances / Buying or Selling a Home


Subject:  Re: How did you do it? Date:  12/2/2000  9:00 AM
Author:  2gifts Number:  15476 of 128887

Yes, this is true -- I can "flip" my shares and assuming price doesn't go down between when the plan buys and I sell, I will make 15% profit... of course minus that 15% as part of my taxable income, and then minus any capital gains. Still could be a good deal, esp. if stock goes up in 6 months, because I would get it at a 15% discount to the price at the beginning of the 6-month plan.

I've done the share-flipping when I knew I was going to need the money, but could wait for the 6-month buy period. Here's how it works assuming you sell the day after you buy. If the buy price is 85% of the price on the last day of the period, then you will have the 15% discount added to your income on your W-4, and will pay ordinary taxes on that. So you end up paying 28% of the 15% gain, but that still means you end up with something like 10% in your pocket. And if you make more because you bought at 85% of the price at the beginning of the period, then you have made even more. But having the numbers really being mixed between Schedule D and your reported income on your W-4 can make it feel like you didn't make as much as you thought.

If you know you won't be buying a house within the next 6 months, then I'd flip the stock and sell the day after you buy. If you think you will be buying in the next 6 months, you could reduce your contributions to the minimum so that you are getting interest on your money. Another option, though, might be to stay in the plan regardless, and if you buy in the 6-month period, see if your folks might be willing to loan you the stock money amount til you can flip the stock at the next buy period.

It can get complicated, but if you think it through, you'll come up with the option that will work best for you. I have actually done some number of different things when we were house-saving depending on which house it was we were buying and how close we were going to be with the numbers. Naturally, the first house was the tightest, so I could change my strategies somewhat.

From what you've written here, it appears to me that you definitely know what you want to do and how to get there. You were just looking to see if there were some ideas you might have missed. With your plan, you'll get that house.
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