What should I do with my Real Estate Rental Property Profit?

[Gretamom]

Hello -
I just closed today on the sale of a property I owned. I owned the property for 3.5 years and after all the fees, taxes, capital gains, etc. I will have $560,000. The money hit my bank account today!! The only thing I have yet to pay off is the capital gains which I don't have to pay now until my taxes are due 4/15/2022.

I am scheduling an appointment with my financial advisor next week and I have also contacted my bank to see about paying down on my other rental properties (I can pay up to 20% of the loan each 12 months).

I have about $850,000 left in loan payments on four 4plex properties, which are worth about 1.6 - 1.7 million total.

My house is paid for and I have no other bills. I also max out my Roth every year and have about $170K in Stocks. In addition, I have about 100K in cash in the bank in a money market account.

My bf has close to 1 million in cash and stocks.

I am wondering what I should do with this $560,000? I was thinking about paying down on my business loans for my other rentals at the max amount, but I wonder if I shouldn't invest it instead? The rentals pay for themselves right now with some left over for profit at the end of the year. Other ideas?

I make enough where I don't have to touch any of the money.

Thanks in advance for your suggestions!

[Letj]

Your taxes on capital gains are due in the quarter the sale was made not when your taxes are due so you should send in an estimated payment. As for whether you should pay down the other rentals, that depends on the interest rates and how comfortable you are with debt. If your rentals are throwing off a nice profit and you  can grow rent, you money can go a long way in the market since it appears you don’t need the money anytime soon.  Alternatively, you can grow your rental portfolio. How profitable  are the current rentals? You might want to consider selling in such a good marker and redeploying your money into something more profitable if they aren’t sufficiently profitable.

[clarkfan1979]

It's really hard to answer this type of question without knowing all the details of your situation. Probably just talk to your financial advisor.

[Mr. Green]

Your capital gains taxes are technically due by January 15th, the deadline for 4th quarter estimated tax payments. If you pay after that, a penalty will be owed as well.

[rothwem]

I think it depends on what phase of life you're in.  Are you still trying to build more wealth or consolidate your gains?  Paying down your loans seems like the smart think to do if you're going to retire soon, but I think I'd probably be looking for another property to buy with a better rent to purchase rate than the one you just sold.  Google "1031 exchange" to see if your property applies. 

[Villanelle]

I'd likely do a 1031 exchange, but if you are trying to simplify and move away from real estate then I would invest at least half of it in the market.  Your portfolio sounds like it is very RE heavy, so I'd want to get more money in stocks (mutual funds).  Some of that would depend on the interest rates for the other loans though, and your overall goals.

[LadyMaWhiskers]

1031 exchange is no longer in the table, if you have taken possession of the proceeds. There are strict rules about use of an intermediary to hold those funds and close the next transaction directly with the title agent.

I agree, hard to offer suggestions for reallocating the proceeds without more detail about your life and goals.