Financial Planning in Your 20s and Controlling Income Taxes - 58

Joe Anderson, CFP® and Big Al Clopine CPA answer personal finance questions about real estate investments, financial planning in your 20s, retirement, and controlling income taxes from Investopedia in episode 58 of the YMYW podcast. Original publish date August 20, 2016 (hour 2). Note that content may be outdated as rules and regulations have changed.

00:00 - Intro

02:49 - “I have 2 town home units, 9 & 10. I lived in #10 since 2006 and rented #9. I want to sell both and buy a new larger home using capital gains. I will have approximately $200,000 from #10 and $150,000 from #9 in capital gains. The new home will cost approximately $500,000. If I use these gains as down payment for a new home, do I qualify for capital gain exclusion under Taxpayer Relief Act of 1997?”

07:21 - “If you’re in a divorce situation and this applies to you, you want to be careful how you do the property selling.”

08:10 - “How do I become financially strong and independent at 22 years old? I have one full time job ($10,800 annually before taxes). I am 22 years old, single, and have no kids. I have no establish credit. I need to buy my first car and get an apartment or trailer before 2016 ends. Where should I start investing with $1,000? Should I put it in savings or look into binary options?”

09:38 - “Try to set aside 15% of your income at any age and keep doing that throughout your career; you’ll have plenty of money when you retire.”

11:39 - “My mother-in-law is in her 70's. She will live comfortably on her monthly social security check and has 1/3 of her assets in the bank. She will come into the other 2/3 when she sells her home. What do you suggest she does with the money she gets from the sale? Should she get an inflation hedge and some appreciation while being conservative at her age?”

15:52 - “A lot of times, people put investments in front of the planning, and that’s where they fall into problems."

16:53 - “My father sold a piece of property that he inherited in order to pay for assisted living expenses. He passed away the year of the sale. His income was less than $15,000. Does his estate pay capital gains on the property, which gained $144,000 in value from the date of inheritance?”

24:05 - “Do I qualify for backdoor Roth IRA?” I own a 403b, 457b, and DCP account. Do these count towards the pro-rata rule?”

27:36 - “How should I manage my extraordinary tax year?”

35:40 - “Unfortunately, tapping your nest egg comes with all sorts of new rules but also opportunities if you understand the strategies.”