Home equity advice

My family just sold a home in the Cupertino/San Jose area for an astronomical sum. In 1960 my folks purchased the house for $17,500. In March of this year, 2013 it sold for $1,275,000.00.



 We want to purchase a home in Sacramento in the mid $300,000. range. Is there any good reason we should not pay for said home in cash?
Any thoughts or opinions would be greatly appreciated.
Thank you!
                                John
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April 01 2013 - Cupertino
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Answers (3)

That depends on the sellers age and tax bracket. Is 300Kx 4%=$12K
enough to change your tax bracket or reduce his income tax significantly?

Talk to your CPA.
Best wishes

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May 12 2013
Wow, good for your parents.  My thought would be to have them pay cash and not give the bank one penny in interest.  But I don't know their financial situation.  You might want to talk to who does their taxes and ask for their advise.  

I would be happy to refer an agent to you in the area if you need one.

Best Regards,


Phyllis Nelson
Broker Associate
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April 02 2013
Everybody has different opinions and financial needs, but the only reason I would consider financing over cash is IF you can gain a substantially higher rate of return on investing your money elsewhere. Example, you finance $300K at 3.25% and you can earn 10-12% ROI flipping homes or whatever you invest in. I actually average around 15%. Plus you get the added benefit of mortgage interest deduction on your income taxes if it is your primary residence. Plenty of books have been written on this subject and some of them say to never pay off your mortgage. Again, depends on your situation and what is best for you.
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April 01 2013
 
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