There are many great ways to reinvest the proceeds from the sale of your Phoenix house. Our latest post explores some options to make your newfound cash work for you!
People sell their homes for all sorts of reasons. Sometimes the cash is needed immediately to pay a debt, and sometimes they find themselves with an unexpected surplus available to use elsewhere. So instead of spending this money on material objects and things that come and go, why not reinvest your earnings into something that will benefit you down the road? Below we will discuss 6 ways to reinvest the proceeds from the sale of your Phoenix house!
A great way to reinvest the profits made from your Phoenix area house is to put the money into a real estate crowdfunding opportunity. Of course, you’ll want to research any investment before sinking your money into it, but investing in a real estate crowdfunding opportunity can be a passive and hands-off investment that can really pay off.
There is no greater investment than that in the future of your children. By contributing to a 529 plan or a designated college fund, you’re not only contributing to your child’s future but also teaching them a financial lesson. The money placed in a 529 plan will grow tax-free and will not be taxed when the money is withdrawn. Many families utilize these savings plans for their children ahead of time so they are not blindsided by huge bills when their children begin college careers.
When selling one home, reinvesting in another can be a great idea. Not only will you avoid capital gains taxes this way, but you will also be able to find a rental property that performs and generates a substantial profit for you. If one home or investment property isn’t working, maybe it’s time to try something different! When you find the right rental property in Phoenix, you’ll be able to generate an almost passive income, building on the proceeds you have received.
You can use the funds to improve your primary residence if you sell an underperforming rental. Building equity in your home, as well as adding a feature you will personally enjoy, is always a good thing. So whether you want to improve a dated kitchen or repair an old roof, now is the time to get those things done. While you might be faced with capital gains taxes when you choose to spend the money on improvements, you can take a deduction for your home improvement costs. Plus, you would need to generate hundreds of thousands of dollars in profits to face capital gains taxes.
Do you have high-interest debts weighing you down? Now is the time to clear them up once and for all. Paying money to borrow money doesn’t usually make sense. While carrying a mortgage can help in some financial situations, having a high-interest loan or credit card doesn’t.
Before spending all your proceeds, don’t forget about the looming tax man. You can avoid capital gains taxes when you reinvest your proceeds into a “like-kind” investment. However, always be aware of your tax consequences when you reinvest the profits from the sale of your home. You should consult your financial planner or CPA before making any financial moves.
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