There are many great ways you can reinvest the proceeds from the sale of your Kansas City house. In our latest post, we explore some options to make your new found cash work for you!
People sell their real estate for all sorts of reasons. Perhaps the home is no longer serving you, or you have a lot of equity that you’re looking to move to another opportunity. Be careful not to take this money though and blow it on material possessions that won’t last long or serve you financially. Below we will discuss some of our favorite ways to reinvest the proceeds from the sale of a Kansas City house!
Real Estate Crowd Funding
A great way to reinvest the profits made from your Kansas City area house, is to put the money into a real estate crowdfunding opportunity. 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.
Investing in your children is one of the best investments you can make! The money placed in a 529 plan will grow tax-free, and will not be taxed when the money is withdrawn. Many people use these funds to pay for future expenses for the child such as college.
A Rental Property
If you sell a rental property and make a sizeable amount you may want to simply move this into a larger or better property. Not only will you avoid capital gains taxes this way (by way of a 1031 exchange), but you will also be able to find a rental property that really performs and generates a substantial profit for you. If one home or property isn’t producing the results you want, it may be time to re-allocate the capital! When you find the right rental property in Kansas City, you’ll be able to generate an almost passive income, building on the proceeds you have received.
You can use the funds from an underperforming rental to improve your primary residence. In this case, you’ll need to pay uncle sam any capital gains taxes owed. But you’ve worked hard for your money and deserve to enjoy the fruits of your labor personally. Building equity in your home as well as adding a feature you will personally enjoy is never a bad thing. Whether you want to improve a dated kitchen or repair an old roof, now is the time to get those things done. You will be able to take a deduction for your home improvement costs which can help offset the capital gains tax hit. Plus, in order to face capital gains taxes on a personal residence, you would need to generate hundreds of thousands of dollars in profits.
Pay Off Other Debts
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 actually help in some financial situation, but having a high-interest loan or credit card doesn’t.
Before you go and spend all of your proceeds, don’t forget about the looming tax man. When you reinvest your proceeds into a “like-kind” investment, you will be able to avoid capital gains taxes. Always be aware of your tax consequences when you reinvest the proceeds from the sale of your home. You should always consult with your financial planner or CPA before making any financial moves.