Cheat Sheet Q & A:


Topic:  Managing property capital gains taxes & estate planning

Today’s question(s):

My mom is selling 1 of her homes. This is not her primary residence. Her current residence is paid in full. She’s expecting to net +/- $125,000, which I’m assuming is subject to capital gains tax. Her question to me is how to invest the proceeds & whether to put in my name as to not be taxed any further. The monies are willed to myself & children. Mom does have a pension & social security. I’m thinking of placing the proceeds in 3 separate areas. Emergency fund, mutual fund & Roth IRA. Your thoughts please.


Bottom Line:  Ok there are a few different moving pieces here so I’ll take them one at a time.  First up…  The tax considerations of the capital gain from the sale of investment property.   


It’s true that capital gains derived from the sale of investment property is subject to taxation unless you choose to do this: 


There are entities called Qualified Intermediaries (aka 1031’s).  If you use one of these exchanges, which work like escrow accounts, to store the proceeds from a real-estate transaction; you’re able to indefinitely differ any taxation provided that you reinvest those proceeds back into like property.  Here is a direct link to the FEA with comprehensive info regarding 1031’s:


Next up whether to transfer the property now or later.  The 2014 threshold for the estate tax (aka death tax) is $5.34 million.  So if your mother’s estate is likely to exceed that threshold then a transfer prior to her passing may make the most sense.  Otherwise their won’t be additional tax consequences related to the transfer of the property at the time of her passing.  Now on to investment choices…

You cited an emergency fund, mutual fund & Roth IRA…  It seems like you’re on the right track. 


Roth IRA:


I’m an advocate of maxing out your IRA each year and I do prefer a Roth IRA if you’re eligible. 


Mutual Fund: 


If you have a specific fund or funds in mind then by all means.  The stock market historically has provided the best investment return of all investment class.  Compare historical performance of the fund(s) and check the fee structure of the fund(s) to ensure you’re not overpaying. 


Emergency Fund: 


While you want this money to be mostly liquid I’d still encourage you to be as strategic as possible with how you store it.  For example the difference between a basic savings account and short duration CD’s could be 1% or more.  Money market accounts will yield more than savings, etc. 


I hope that’s helpful.

If you have a topic or question you’d like me to address email me:


Audio Report:




Solar continues to get cheaper...  Is it cheap enough yet?


Bottom Line:  While solar tech continues to improve and adaptation continues to progress at a good clip (greater than 40% growth in 2013), naturally prices are coming down as well. 


Solar prices have come down by 60-75% over the past five years as it matures and has achieved greater scale.  The estimate is that the drop in prices will continue in 2014 with an expected price drop of 6% over 2013.  So what’s the cost for the average home owner? 


  • The average cost of solar adaptation for the typical 3 bed home is now $30,000


That probably still sounds too high but that’s not the net cost to you… 


Because of tax credits and Federal rebates… 


  • The average net cost is:  $16,500


That’s a level that should be approachable for many more families.  It’s the first time I’ve seen the cost below $20,000 for the average home.  So should you consider going solar?  Consider this:


  • If your average utility bill is $175 per month you’ll have paid for your solar equipment in less than eight years


That’s compelling if you plan on being in your home for the long run.  Additionally many solar companies will allow you to finance your solar equipment and the monthly payments are often lower than the monthly utility bill.  So if you’re inclined it could be time to take a serious look at solar power for your home. 


Audio Report:



So what is the average coffee consumption per person & how do you compare?:


Bottom Line:  Recently I depicted the alcohol consumption per person per week.  That led me to wonder…  What about the most important beverage of all?  Studylogic had recently conducted a study to determine the average adult coffee consumption per day.  Now here’s the thing.  A cup actually has a specific definition.  Its 8 ounces.  Many heavy coffee drinkers have a cup of coffee that equals cups to begin with (yes I’m one of those people).  So let’s get to it:


  • The average coffee consumption per day per adult in the US is currently 1.75 cups per day


So I decided to calculate just how much I drink per day (at 8 ounces)


  • My daily average consumption is…  6.75 cups per day…


Audio Report:



Let the light in if you can...  Office lighting affects sleep success:


Bottom Line:  I think most people would agree that given the choice between natural and artificial light, we’d choice natural light.  In that same line of thought…  Given the choice between an office with windows and one without; I suspect most would choice the office with windows.  What you may not have known is just how beneficial for your health the natural light from those office windows actually can be for you. 


Northwestern researchers have determined:


  • Those who have windows in their office at work take in 173% more natural light per day


  • They also determined that those with the windows slept and average of 47 minutes longer


So the energy level is better for those with office windows.  Productivity is improved. Health is improved.  So see the light…  Literally.


Audio Report:



The employment outlook continues to look better for college grad in 2014:


Bottom Line:  As a follow up to a story from a month or two ago… 


As we near graduation season for 2014 colleges the outlook for employment is improved over last year. 


  • Hiring managers are planning to employ 8.6% more college grads than last year


  • The average starting income is down just a bit year over year (about $300)


But the increase in employment outweighs the slight average decrease in salary.  But there is one degree that hiring managers are looking for that dwarfs all others…  


  • 70% of hiring managers are looking for degrees in business


Audio Report: