Most strategic use of funds currently in the stock market

[Geoff Husa]

We are currently preparing to get started with REI in the Phoenix area. Sometime mid next year.

We have some capital in our savings account. We also have some money spread around in various mutual funds; some in plain old mutual funds, and also some in a roth IRA, and some in a roth 403b (all diversified in various mutual funds).

A portion of what we have saved and invested in the stock market was always intended for an eventual house purchase. It's not enough to buy a house in our market, but it is enough to make a big difference in either a down payment or with rehab costs.

Our preferred strategy is to BRRRR a house, but open to other methods to get a good deal for buy and hold. We'd plan on living in the house for a year before turning into a rental.

So my question to anyone familiar with taxes and real estate investing... What would be the most strategic way to make use of the money we've saved and invested in the stock market. We'd like to find a way to use that money to help buy and/or rehab our first house. How can we minimize tax liability when pulling these funds and using for the house?

We could pull the full allocated amount we've designated for the house out of either the plain old mutual funds, or we could take it out of either of the roth accounts. I'm guessing we want to avoid using the roth accounts since we want to keep that tax free savings for retirement. Open to creative suggestions!

[Whitney Hutten]

@Geoff Husa The roth isn't tax-free... you've already paid the taxes on it :). I would get with a real estate CPA who does strategy sessions (not QA sessions) to understand what would be best for you.  You may be able to take advantage of some of the CARES ACT provisions by 12/31/2020 for traditional retirement accounts (keep in mind these provisions do expire). 

Have you thought about investing in a househack (multi-unit)?  That way you are turning your primary into an investment property as well???