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The Big Move: ‘I want to buy a house for under $300,000, but I only earn $60,000.’ Should I cash out my brokerage account? How do I know the best time to sell my current home?

Dear MarketWatch,

I want to buy a house in a different state for under $300,000. 

I have $150,000 in cash and a mortgage-free house worth $300,000. I also have $300,000 in my brokerage account. 

But we only make $60,000 a year now that we’re retired. So lenders don’t seem to be interested in us. 

What would be the tax ramifications of using my brokerage money? How can I time the sale of my home to pay for the new home in this market?


Retired and Ready to Move

The Big Move’ is a MarketWatch column looking at the ins and outs of real estate, from navigating the search for a new home to applying for a mortgage.

Do you have a question about buying or selling a home? Do you want to know where your next move should be? Email Aarthi Swaminathan at

Dear Retired and Ready,

Hands off that brokerage account!

First off, a note of caution: Are you confident that you’ll like the new state? Do you know the real-estate market in that area? You may want to rent a place for a few months and see if you like the neighborhood.

That said, Matt Barbieri, a certified public accountant with Wiss & Company, said that using the money in your brokerage account could incur taxes, if you’ve made gains on your investments and you cash out.

If you sell your stocks, bonds, or other positions, and you “realize that gain” to buy this new home, Barbieri said, “you could find yourself paying taxes on gains, and depleting your assets in an inefficient manner. “

On the other hand, selling your home doesn’t incur taxes (with caveats). 

If you and your spouse have lived in your current home for two out of five years, and you file your taxes jointly, the Internal Revenue Service allows for an exclusion of gain on sale, Barbieri says, of up to $500,000. 

In other words, if you sell the house you’re living in, you wouldn’t generate any tax, and all of the money could be used to buy your new home.

So the best route for you is to sell your existing home, get that cash, and buy your new sub-$300,000 home in that different state.

As to the general timing of the sale of your home, I’d say sooner rather than later. 

Mortgage rates are high — above 7% — and buyers are pulling back. But for those who are looking, they’re telling me that they’re not able to find plentiful options, because the supply of homes or inventory level is still pretty low. 

In other words, not many people are selling homes, even though there’s still strong demand for it.

That means that you’re more likely to find a buyer. You’re not selling at the top, since the rate increases have pushed prices down somewhat, but you’re also not gonna want to wait around to sell when prices fall far, far below where they are today.

If there is concern about being stranded without a place to live, consider listing your home with a ‘contingency’ which means that the sale of your home is contingent on you finding a new home,” Barbieri says. But he also suggests you to talk to a local realtor to see how a contingent offer may be received.

That may give you time to finish the process of selling your home, and then using that money to buy that dream home.

But as my disclaimer at the beginning of my response notes, do not act impulsively. Be sure about your move, and if you are not 100% sure, make sure you have an exit strategy. Renting first may be the best way to test that out.

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