Advice from Nashville's Financial Guru Dave Ramsey
By Dave Ramsey
Author of Financial Peace and The Total Money Makeover
"What to do with profit from selling house?"
I'm currently debt-free except for my home. If I sell my home and make profit, what should I do with the money I make until I buy another home? It will be about a year before I buy another house, and was wondering if a mutual fund would be a good place to invest the money.
If you're talking about a place to park some money for the short term, I'd go with a simple money market account. You're not going to earn much, but it will be safe and not jump around all over the place. I never recommend investing money in growth stock-type mutual funds unless you're going to let the money sit there for at least five years.
The good news is that you probably won't have any tax worries. You don't have to pay capital gains taxes on the sale of a personal residence unless you see a profit of $250,000 on the home and have held it more than two years. If you're married and filing taxes jointly this figure jumps to $500,000.