All Forum Posts by: Daniel Murphy

 You can still get this done before the end of the year.  You mentioned that your account was a NON retirement account.  Assuming it's a taxable account? 

And that you are at a loss for the year, but are you at a loss overall?  Log into your account, click on "cost basis"  if it's negative, you can sell everything at a loss today & you should have no tax consequence.  

If it's at a gain, you'll owe either 0 or 15% based on your total income.  And only on the gains. But you may be able to write off some of the costs associated with the home purchase to offset any gains.  

If you read the first page of your SS statement, it states this 75% figure. 

Think of SS as a bathtub full of water. You, me & everyone else is working & adding money to the bath tub.  Your parents & retirees who are taking SS are taking water out of the bathtub (the drain).  The 75% figure basically says that in 2034, IF WE CHANGE NOTHING, there will only be enough money going into the bathtub to pay 75% of the money coming out.  
This is HIGHLY unlikely to happen.  Can you imagine a politician telling the largest voting block that they will do nothing to change a 25% decrease in their income?  

1) small changes are all that is necessary to kick this can down the road for another 20-30 years.  IE- small increase in payroll taxes or a slightly increased full retirement age.  

2) when changes like this are made, they typically are made incrementally.  IE - if insurance companies misprice a product, they first correct it by modifying the cost to NEW customers.  If that is not enough, they will then go back to current customers & increase costs or cut benefits.  Meaning that it is much much more likely that any changes in SS will affect the younger generation first, and the older generation second (if at all).  

I use Stessa.  They do have reports, but I rarely look at them. I just want something easy to track expenses, categorize them & keep receipts.  It's free & works pretty well. 

I like your idea of paying down enough to get to your 30% ratio.  Partially this depends on what interest rate your bad debt is.  If it's 6-8% or higher, it may make sense to pay off the debt. 

However, one thing you could consider is a "sinking fund".  IE, if your bad debt is 170k & your interest rate is reasonable, you could invest the money and (hopefully) get a higher rate of return than your interest rate. Once your investments reach the $170k you could sell it & pay off the debt.  
Another thought is that the market is quite low right now so it makes a good opportunity to invest & make money.  Buy low... 

Just don't forget that if you do invest the money in the stock market, you'll owe taxes on the gains whenever you do sell.  I would want to know a lot more details before I gave any real firm recommendations though.  

 No, we originally based our pricing off of what our realtor recommended to us.  In Jan, we drove down with a fully loaded trailer & setup the house. MN to FL with a toddler.  It was crazy busy.  We put more thought into setting up the house than we did into pricing & the mechanics of the business.  We just listed Feb, March & April for the numbers our realtor offhandedly said we could probably get.  

Our property went live while we were driving home.  We were literally at a gas station in Florida when our phones started dinging left & right with booking requests.  I immediately told my wife to go in and shut down April because we were pricing too low! 
As soon as we got home, we signed up for Pricelabs & have been using them for our pricing ever since. 

When we originally looked at Airdna for our numbers in Cape Coral, they were low.  They were projecting $299-350 / night during our peak season.  We opened for business during peak season and (regrettably) didn't have pricing software setup yet.  Within a week we signed up for Pricelabs & increased our peak season rates to the $350-475 range.  

So pricelabs was definitely helpful, but low which I prefer.  Like most others on here, I took the time to look at & analyze a lot of other properties in my area to do an independent study.  My rates always ended up being higher than Airdna's projections. 

we deliver everything to our cleaners house.  They bring it to the property.  

If it is something small or something that can go directly to the house, we have no problem asking our guests to grab it & bring it inside. 

I have a STR down there & drove down the day after Ian to clean up the property. I freaked out a bit as neighbors told me that it would take years for the area to get back to normal & trying to get me to shift my house to LTR (so their friend could rent it). After coming back & getting more bookings for contractors, insurance adjusters etc, we decided to keep it a STR.
We're not worried about the long term health of the area.  

Thanks @Jesse Goswick, that helps to clarify.  That means that you'd be doing a qualified to non-qualified transfer.  

In this case, you've never been taxed on the qualified plan contributions. There will be no cost basis, the entire account will be taxable at ordinary income to you plus a 10% penalty if you are younger than 59.5 years old.  

No matter how you move the money, you'll be taxed & penalized (depending on your age). Normally, I would not advise this however every situation is unique. For reference, we cashed out my wife's small IRA's earlier this year (<$10k) to help fund our first STR purchase. So while there are "generally not advisable" rules, that doesn't mean it wouldn't make sense.

If you were a client or prospect of mine, I would want to first talk through your overall financial situation to see if there are any other options. Or at least I'd want to run the numbers for you so you can go into this decision knowing all of your options & financial costs. 

A few things to talk through. In my head, when I hear someone "got $100k" or another large chunk, I assume it to be in a non qualified account. IE, not a 401k or IRA. Meaning it has different tax rules.

If your dad is retired and your mom is still working, it's possible that they are in a fairly low tax bracket. When I have clients in a low tax bracket and a decent chunk of money available outside of a 401k or IRA, I talk them through potential partial roth conversions.

The theory is that any money your parents saved into their 401k's while working was probably done pre-tax & saved them potentially around 22% in taxes (most common joint tax rate). If they are retired & now in the 12% bracket, they could convert funds from their IRA/401k over to a Roth. Use the $100k in taxable money to help pay the taxes & anything they need to live. Doing this locks in the 10% tax arbitrage gain (they saved 22% initially & paid 12% upon conversion).

This is obviously frought with assumptions... I echo with everyone else here though, there is a lot of info missing to make an accurate recommendation.  I'm just throwing out another idea that is not commonly discussed.