How should the proceeds from selling 2nd home be invested?

Plas · #1 (**permalink**) 03-04-2008, 04:27 PM

Hello,

Here's the scenario,

I have 2 homes, 1 is paid off free and clear the other has approximately 50% equity.

I pay over $12,000 a year in property taxes for the 2nd home that is free and clear.

Similar homes in the neighborhood of the 2nd home have sold for $4,000,000 and higher.

My thought is to sell the 2nd home and then purchase some income producing property, mainly so that I won't have to pay capital gains on the profit. Also to provide a source of income instead of a liability.

Is this the right course of action? if so, what properties would be the best investment, I would be looking for properties that would require very little effort on my part to manage.

GarySpicuzza · #2 (**permalink**) 03-04-2008, 06:50 PM

$12,000 in property tax on a $4 million dollar home doesn't make sense.

It can't possibly be that low.

Something's wrong!

Click HERE for the Maricopa County Property Tax Calculator.

According to their calculator property taxes would be $41,722.

A $400,000 home would be $4,172.

So you either paying 3 times too much in tax (a bad thing) or about 71% less than you should (a good thing)!

Plas · #3 (**permalink**) 03-04-2008, 07:00 PM

The property is in San Francisco and the tax amount was assessed in 1991, it only changes there when the property is sold.

GarySpicuzza · #4 (**permalink**) 03-08-2008, 02:49 PM

Okay Plas...What to do with $4 million?

How about just stuffing it somewhere for 5 years SAFE and sound and EXEMPT (Florida) from legal process then take $16,667 per month Lifetime Income?

Over a 15 year period beginning at age 70 you would pull $3,000,000 out and still have $5.7 million!

Did you know, just for some mathematical fun facts, a 25% loss in one year will require a 47% gain the following year to just keep even with a SAFE investment that's just limping along at 5% per year?

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