Reply to Using Taxable Brokerage Account to Buy Vacation Home

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[quote=Anonymous][quote=Anonymous][quote=Anonymous]So we own our home outright in NOVA valued at about $850K. We have about $1M in retirement accounts. $200K in high interest savings. Money in 529s, HSAs, I-Bonds. We also have about $800K in taxable brokerage account. We are 50 year old couple with two teenage boys and are thinking about getting a lake house for around $500K. I'm not even sure why I feel like $500K is the number but that's what we are thinking. My question is...with mortgage rates so high, I was thinking of using the money in my brokerage account to just buy the 2nd home outright. What are the pros and cons to this? I was originally thinking...oh no, I don't want to spend my brokerage account, but am I really? or am I really just reallocating away from the stock market to real estate? I mean the 2nd house is still an asset (hopefully an appreciating one)...so is the only risk whether the real estate market does as well as the stock market? Granted you can't put a dollar amount on how nice it will be to vacation here but there will also be a lot of expenses with the 2nd home. We'd hope to rent it when we could. The idea would be to eventually sell the NOVA home and retire to the 2nd home. Any thoughts are welcome.

Lastly, how do I figure out how much tax I would owe on the money I would need to withdraw from the taxable account?

Thanks[/quote]

Not sure why you had to list all your financial stats but what it really comes down to is do you think the returns on the money staying in your brokerage account will be greater than the mortgage interest rate if you took out a mortgage to buy the lake house. Of course owning a home outright has some psychological value and peace of mind.[/quote]

But it also brings alot more expenses than just the mortgage. Utilities, Upkeep, furniture, taxes, toys for the water, everything else you need to live in a 2nd home...kitchenware, home office maybe, etc etc. etc. Will the rental income that you might get make up for these expenses is another question you need to ask yourself?[/quote]

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