Cashing out stock to invest in real estate? Tax Implications?

[Corey McKinney]

Can someone explain the options for cashing out money from an individual stock to then invest it in real estate? My wife was given a lump sum of stock in an individual company (Big corp./low risk) that a family member set up a long time ago with dividends reinvested. We are thinking of using this capital to invest in real estate instead as we are much more educated and knowledgeable (with the help of BP) in this field. What type of tax implications would we be looking at if we pull it out? Besides a self directed IRA, are there any other options on deferring or reducing the taxes I will owe? Obviously I would like to preserve the most amount of this fund in order to invest in RE.

Thanks!

[Mark Salcedo]

Hey Corey, I'm also invested in the stock market and from the information you're telling me, if the stock was held in a portfolio, very apart from IRA's, then you are subject to capital gains tax. This tax is steeper the less time that you hold this stock. You will be taxed solely on the "gains," will be taxed accordingly on the time that you've held the stock, and as well as what tax bracket you are in.

You should look up capital gains tax in California and find what category corresponds to you. Since all this will be done at the end of the tax season, I recommend getting a good tax guy who can handle both the stock transaction and the RE side should you proceed buying RE with that money. (Tax breaks, etc)