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Learning, Sharing, and Teaching => Real Estate and Landlording => Topic started by: mrcrabber on September 29, 2019, 11:23:56 AM

Title: Which investments to pull first-home down payment funds from?
Post by: mrcrabber on September 29, 2019, 11:23:56 AM
Hey all,

I'm about to purchase my first home for primary residence. I have the assets for the down payment currently invested in a few different vehicles, and I'm still deciding which is the best place to pull the funds from. I'd be curious to hear folks thoughts on where to pull funds from, and any tax advantages or other investment benefits of one vs another.

My current assets and options to pull from:

Employer 401k:
  - Roth and Pre-tax: all stock total market index funds

Vanguard Brokerage account
  - VTSAX - total market index
 
Vanguard Roth IRA
 - VBTLX - total bond market


What would be the order for pulling from each of these funds that folks would recommend?

I've read about the $10k first time home buyer exemption for retirement funds, but not sure if that's a good call or not.

Would love others thoughts on approaching this and what the priority of funds would be.
Title: Re: Which investments to pull first-home down payment funds from?
Post by: rothwem on September 30, 2019, 03:17:24 PM
If youíve got to pull from investments, Iíd do the taxable brokerage account. Youíll pay the 10% penalty and income tax on the regular 401k, so no way Iíd pull from there. You can pull 10k out of the Roth to purchase a home but you can only put it back at the max-out rate, so thatís a no-go also. That leaves you with the taxable brokerage account that you pay cap gains tax on as being the only remaining option.
Title: Re: Which investments to pull first-home down payment funds from?
Post by: BECABECA on October 06, 2019, 02:09:55 PM
Yes, another vote for pulling from your Vanguard Brokerage Account and leaving your 401k and Roth alone. Raiding your retirement accounts would be a major setback to your long term net worth, since even if you could somehow withdraw penalty free from them, youíd be using money that could have grown tax free while not touching money that gets taxed as it grows. Thatís a bad trade off.