Advice To Parents Interested In Selling

[Terrill Clark]

Hey BP Family, Not sure if you only give advice on investments but my parents are still living in the same home they've owned for 20+ years but I'm sure they have refinanced and whatever else you can do to prolong paying it off My dad mentions selling the house all the time but isn't taking action for whatever reason. He says there would still be some profit made if he does. My question is, would he have the option of selling and using whatever money he walks away with and getting a new home with an FHA low down payment loan or is that only for first timers? I know this isn't really an investment question but your expertise would be appreciated :D just looking to make this a reality for them

[Clayton Mobley]

@Terrill Clark Welcome to BP! I'll second @David Faulkner regarding his loan advice and the possibility of excluding gains from the sale of your parents' home. If they are really looking to sell, this is likely going to be the biggest boon to them.

However, I'll also point out that a 1031 exchange is only for investment property. So, unless your parents moved to another home and converted the current property into a rental for a year or more (there's no specific time limit, but this is the standard), they would not be able to use a 1031. If they were looking to create some investment income and can afford to buy another home without using the proceeds from the sale of this one, however, a 1031 would be a great tool for down the road if they were looking to trade-up to a more lucrative property or move their portfolio into another market without paying taxes on the sale.

It sounds like the tax exempt gain will be the best bet - it's called the Section 121 exclusion if you want to google it. $250k for a single person, $500k for a married couple filing jointly.

Best of luck to you and your parents!

Clayton