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Anne, Master Tax Preparer
Category: Tax
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Experience:  Enrolled Agent with 25 Years Experience specializing Individual and Small Businesses
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If i were to take $ out of the stock market to pay down the ...

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If i were to take $ out of the stock market to pay down the mortgage and a home equity line on my home- would there be tax consequences to this?

i had received a lump sum of money on the sale of some rental property in 2006. We paid a large sum on this money for Capital gains. So in my mind this money has already been taxed.    I currently have $85,ooo in equities in the market- I would like to put $50,000 on the mortgage and refinance at a lower rate, i would like to pay down my home equity line (currently 28,000- 20K of which was for the capital gains tax on the lump sum) and put 20,000 on that.

Will I have additional tax implications for my 2008 taxes if I do this?


Thank you for using justanswer. Whenever you sell stock, you net the cost of the stock (plus any fees if they are not netted out of the gross proceeds) from the proceeds and you will pay tax only on the difference between your cost and the sale price. If I understand your question correctly, you took the money you made on the sale of the rental and invested it in the stock market. If that's true, then the $ amount you paid tax on is your cost basis.

If this transaction results in a negative amount (loss) you may claim up to $3000/year of that loss over & above your cost basis per year until the $ amount is used up.

Please see below for more in depth information

Frequently Asked Questions - Keyword: Stock Sale

Tax Topics - Topic 409 Capital Gains and Losses

I hope this helps you

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