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New Home Construction Minimizing Roth Impact | Forum
John
Mar 15
My wife and I are 62, comfortably retired and plan to start building a new home about this time next year. The budget is $700K. We have the money for the construction but it is in traditional and Roth IRAs. We expect our current property, a remote log vacation home on 3 acres, to sell for about $300K and would like to avoid the double move, storage then house along with temporary living. We plan to put this property on the market when we break ground on the new home. We have been doing Roth conversions for the past 3 years maxing out the 24% tax bracket. It would seem that not invading the Roths for the full $700K would be beneficial from a tax perspective. The real challenge as I see it is how to apply the proceeds from our current property to the new home if it does not sell at the appropriate time next summer. One option is a bridge loan with closing costs and a current rate of 4.25%. If that bought us 9 more months of selling time the cost would be around $12500. Meanwhile, the average long-term annual tax free return on the $300K Roth money would be around $33K. Of course, making concessions on our selling price and terms could be another option. If it sells early and we're not able to negotiate a delayed closing date or short lease-back agreement, we'd be looking for temporary living space and personal property storage. Anything else we should be considering for best financial outcome with least hassle?
Brittany Wang
Mar 15
Are you having the house built, or actually in charge of the construction yourself ? If you are actually in charge of construction yourself, you will have more flexibility, and can move in before the house is done. How long will the house construction take ?
Alyvia Lynn
Mar 15
Considering the financial aspects, have you explored consulting a financial advisor for tailored advice? They might have strategies beyond bridge loans, especially given your Roth conversions. Also, for the building process, have you checked out Stark Builders starkbuilders.com.au? They could provide insights on minimizing hassle and ensuring a smooth outcome. Best of luck with your new home journey!
