We are planning to sell our home in a few months and relocate. We plan to rent for a few months while looking for a new house. We are safely under the $500k gain limit Is there any tax risk if I put proceeds from our sale into a investment account for a few months, until we find our new place? TIA
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It doesn’t matter what you do with the money after the sale. Once you qualify for the home exclusion, you are free to do whatever you want with the money. Go on vacation, invest it, save it, give it away. There are no subsequent “conditions” to worry about.
If you do invest it, it’s the same as any other money you invest. If you make gains, they are taxable. Stocks can be either short term or long term depending on your holding period. Stocks can also be risky. You can lose money on your investments.
Do not invest these funds if you’ll be utilizing them within the next 5 years. If your time horizon is more than 5 years, a total stock index funds will suffice. You want to preserve capital. Place it in a HYSA.
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