My husband and I want to reinvest equity from selling our home into our student loan debts. How does that work?

Asked by deborahemory, Fairfield, CA Wed Apr 9, 2014

Also, we were first time home buyers-- do we have to pay capital gains (33%) of it towards taxes? Any info would help, we may be relocating and are trying to decide if we need to rent/sell. Our student loans are almost another mortgage...

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Kathy Luebcke, Agent, Fairfield, CA
Thu May 22, 2014
Hi Deborah - as long as you have owned your home for 2 years you each get a $250,000 deduction so that means no capital gain on your home if you cash out equity up to $500,000.

You can pay off any debt with your net proceeds. Depending on the value of your home and equity I could help you decide whether to rent or sell.

Deciding what to pay off first typically is determined by which debt has the highest interest rate. Payment is also a factor. The market has picked up sufficiently so that selling may be your best choice! 707-280-5753
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Alexander Gr…, Agent, San Jose, CA
Thu Apr 10, 2014
I would be more than happy to help you with your mortgage payoff questions. Simply put you just pay more on your monthly payment than the minimum due. Just send me an email if you have any further questions.

Alex Greer
Loan Officer
NMLS #1056079
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Steven Ornel…, Agent, Fremont, CA
Wed Apr 9, 2014
I agree with Andrew, consult with a Tax professional (yes, it will be worth it).
Personally, I would find a CPA.
Here's a link from the IRS that will come in handy: "Capital Gains and Losses"
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Andrew Purdy…, Agent, Leadville, CO
Wed Apr 9, 2014
Obviously, please consult a tax professional before taking any advice. If you sell your home, and have lived in it for at least 2 out of the last 5 years, then you and your husband should qualify for $500,000 in tax free income from the sale. ($250,000 each). Purchase JK Lassers "Your Income Tax 2014" and make sure that you thoroughly investigate your options. There are some guidelines that you need to read about and follow. My second word of advice is analyze your debt. If you have debt at higher interest rates than your student loans, pay them off first. Your student loan debt is usually at a lower interest rate, and can also be a write off. Effectively manage your interest rates and the interest that you can write off for a successful strategy! Good Luck!
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