I'm selling a rental property for more than $600,000. I owe nothing except $250,000 on a personal residence, which I co-own with my domestic partner. I am 78 years old and my personal income is about $16,000 from Social Security and a small, company retirement plan. Should I put the money from the sale of the rental property into Jumbo CDs? What are my capital gains obligations this year?
"Assuming the property was held more than one year, your taxable gain rate of 15 percent would mean a tax bill of $90,000," said FPA member David Buskirk, CFP®, EA of Cambridge Wealth Management. "However, any gain on the sale of real estate, up to the amount of any depreciation taken, is taxed at a 25 percent maximum rate rather than the 15 percent rate. You should consult with your tax adviser to see if the latter applies."
In regards to the purchase of Jumbo CDs, Buskirk said the answer is, "It depends. It's possible the purchase of Jumbo CDs will get you where you want to go. However, my experience tells me that putting all one's assets in any one investment is never a prudent idea."
Given your situation, Buskirk recommends that you certainly meet with an experienced financial planner to receive a thorough financial analysis. A financial planner can help you decide the types of investments that best suit you.