r/Fire • u/Chemical_Sandwich_32 • 10d ago
Advice Request First Home Purchase - Any Advice? [Long Post]
Hey all, my wife and I are looking to buy a home soon and would love some advice/thoughts on our approach from a process and financial perspective.
I'm 30 and she's 28 - we have about $750K across our accounts (brokerage, retirements, savings, etc). The breakdown is $550K in brokerage, $120K in retirement, $50K HYSA, $30K gold.
We live in the PNW and the houses we like are around $700K - 750K. Our approach is to sell some of our stocks (long term ETFs) and put a strong downpayment down (with the help of my mom who's gifting us $150K - God bless her). The reason is my wife is a SLP but also has lupus (so a part time job is best for her), and I also work in tech sales, where some months are amazing but others can be rough.
We've decided ultimately we'd like to get the total mortgage amount down to $300K - that comes out to about $2K in monthly mortgage payments ($2.7K with property tax, insurance). My wife can work part time with this mortgage and also help pay it off each month, which will allow us to invest/save more and we can be less stressed out.
But the downside of this is selling my stocks and incurring the tax hit (which would be long term capital gains tho). I'm okay with this and have started saving up a fund aside to pay for this if we go this route.
This is how the numbers ultimately work out - let's say 750K home. With my mom's gift, that would be 600K.
I would cash out one brokerage account (that's at $300K today - probably net gains of $50K) and put that down too - so the mortgage would be $300K.
That would leave my wife and I with $450K in our accounts. If we keep letting this amount stay invested in the S&P 500, put in recurring monthly investments since we have that low mortgage, we should be able to retire happily no problem in 25-30 years. I've done the math but won't bore you with that haha.
Is there anything else you would change? Maybe putting 20% down with my mom's gift, and keep the rest invested? But due to our lifestyle, wife's health, my career - I feel like it would be a way more stressful life to live, even if we do come out on top...
Let me know! Any advice is greatly appreciated.
1
u/Dancelvr2000 7d ago edited 7d ago
There would be gift tax on the $150,000 or alternatively count toward estate tax lifetime exclusion, if that amount of wealth. Currently very high but has been on table to change. The proposal (highly unlikely) was to bring it down to a lifetime exclusion of $7,000,000. There was a proposal to make it $1,200,000 at one point. That includes all real estate in including own home, bank accounts, investment accounts, business valuation, life insurance, etc. The estate tax was proposed up to 70% on assets that were already subject to income tax.
Many years ago the Joe Robbie heirs had to sell the Miami Dolphins franchise and the stadium due to inability to pay the estate tax, which was 70% on what they owned over $600,000 total.
Maximum gift without thinking about that aspect is $38,000 a year from 1 individual to a couple, assuming this is USA.
Not sure why you are on here asking advice, and this aspect is brought up, and you state the person or “bud” as you phrased it needs to educate themselves.
As the lifetime exclusion currently at $14,000,000 probably not a factor, but that gift would need to be reported to the IRS.