Tax Efficient Way to Cash Out of Stocks to Purchase Property

[Syed Rizvi]

Hi BPer's,

I'd like to convert some of my stock and bond holdings to cash and then purchase an owner-occupied investment property with those funds (using the FHA loan, probably less than 10% down payment). I have held most of my stock and bond holdings for 2-3 years, so that should trigger the long-term capital gains tax (I have 6-7% unrealized gains). However, I am wondering if there is a better way for me to most tax efficiently convert these liquid assets into a real estate investment--much like how the 1031 Exchange works for real estate to real estate conversions.

Also, I may consider dipping into my Fidelity IRA and my 401K to purchase the property (as in, take out a loan from my IRA and/or my 401K). Is that wise?

Please feel free to message me privately as well. Really appreciate all of your advice! Thank you so much!

[Carl Fischer]

@Syed Rizvi

Did you know another way you could purchase the property is with your retirement funds? You can use a self-directed IRA or a solo 401(k). This means the property could be held in a tax free or tax deferred environment. You would not have to take a loan or an early distribution, your IRA could own the property and all income and payments would go to or from your IRA.

I would be happy to help answer any questions you may have, or to connect with you.

Thank you

Carl Fischer