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Path: utzoo!watmath!clyde!bonnie!akgua!akgub!cylixd!dave
From: dave@cylixd.UUCP (Dave Kirby)
Newsgroups: net.invest
Subject: Selling your home and buying another
Message-ID: <570@cylixd.UUCP>
Date: Wed, 11-Dec-85 14:02:54 EST
Article-I.D.: cylixd.570
Posted: Wed Dec 11 14:02:54 1985
Date-Received: Fri, 13-Dec-85 07:33:27 EST
Reply-To: dave@cylixd.UUCP (Dave Kirby)
Organization: RCA Cylix Communications , Memphis, TN
Lines: 23
Summary: A CAVEAT

In article <923@terak.UUCP> suze@terak.UUCP (Suzanne Barnett) writes:

>...If I sell a house for $100,000, to avoid capital gains tax I must 
>buy a house costing $100,000 or more...
>Suppose the remaining mortgage on the house I sold was $70,000. That 
>means I receive $30,000 minus realtors fees and closing costs. I do 
>NOT have to place that $30,000 down on my new house...


That is correct; however, your monthly mortgage payments would be
higher on the new house if you don't put all your equity into the down
payment. Example: suppose you had put down $5K on your $75K house, and
the monthly payment on the remaining $70K was $700/month PITI. If you
sell the house and buy a $100K house, and put minimum down on it (say
$10K), you keep the extra $20K, but now your monthly payment on the
remaining $90K is about $900/month PITI. So if you do this, make sure
you invest that remaining $20K in such a way that the return will at 
least offset the extra $200/month you will have to pay on your mortgage. 
That would require a return of $200/month = 1%/month = 12% annually in
the example cited above.

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Dave Kirby    ( ...!ihnp4!akgub!cylixd!dave)