Ep 71: Taxes on Inherited Real Estate, Roth Conversions & More – Mailbag Episode

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Show Notes

Today we’re opening up the mailbag to answer your questions. Let’s jump into it.

Kerry asks: “I just started a new job that has a higher upside than my previous job, but a lower base salary. I’m counting on some big commissions in my future. But my base salary is low enough that it would be hard to contribute to a 401k and still pay my bills. Is it ok to just use my commissions for retirement savings, even though those payments will be somewhat irregular?”

Congrats on your new job with the higher upside potential. That’s great. It sounds like you’ll be on a rollercoaster of salary this year.

Don’t get caught up in your retirement savings. I think you could use a mindset shift. I would build up more of a buffer in your emergency savings fund. Trust me, you’ll never feel bad for having cash on hand.

Irregular income can be really tough, and having a buffer of cash will help you feel more comfortable.

Harold asks: “I’m almost 60 and don’t have any money in Roth IRAs. Should I be converting some IRA money to Roth for the next few years?”

There’s a lot going on in this question, and we get a lot of questions on Roth conversions. First, make sure you talk with your financial and tax professionals to get specific guidance.

Ross asks: “My mom died two years ago and my three sisters and I inherited her house. I’ve always wanted to sell it, they’re just now coming around to the idea. But now they’re worried about the tax implications of selling it. I keep telling them that I don’t think it will really hurt us from a tax perspective, but I can’t really explain why. Can you help?”

We’re sorry to hear about the passing of your mother. This is a very important question. You may or may not have some taxes. But it wouldn’t be on the full amount of the sale. You need to understand the step up in cost basis.

We’ll dive into this in more detail on the show, but let us know if you have any questions.

[3:02] – Most affordable states to retire

[9:04] – Roth conversions

[27:48] – Selling mom’s house

 

Thanks for checking out this episode. We’ll talk to you again soon.

 

Trust me, you’ll never feel bad for having cash on hand.”

-Scott Sierens