Starting residency… Buy/Wait/something else?

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WhittyPsyche

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Other question. If we put all the money back into a new home do we still need to worry about capital gains taxes?
 
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Your title is misleading because I think most come in with the mindset of "don't buy houses in residency lol" but reading the details, it sounds like your spouse is the primary earner of 200k+.

If you plan on being in training for 7-9 years, I think it would likely make sense to purchase instead of rent. Esp when you have a family of 6, I imagine renting a 3bd (minimum) in your VHCOL city may be disproportionally higher than purchasing.

There are probably posters more experienced than me here but IMO if you are staying for minimum of 7 years and your husband basically makes "attending money", it makes sense to buy. Is he in a stable job? You may not need a physician loan to get good rates (sub 3%) and low down payment (<5%). Honestly in this market with inflation being 5.4% yoy, having a sub 3% mortgage rate is basically free money. If you have the financial discipline to not blow the money, I would invest the rest in index funds and just take your sweet time paying off a 30 year mortgage.
 
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Other question. If we put all the money back into a new home do we still need to worry about capital gains taxes?
If you're married filing jointly, you shouldn't have to pay capital gains unless the sale proceeds are more than $500k. For an individual it's $250k. This applies as long as he lived in the condo at least two out of the previous five years before the sale as his primary residence. I'd still consult a tax adviser because there may be fine print as your husband bought the condo before you got married and I don't know how long into the marriage you have sold it, but in general that's the rule.
 
I think it's hard to predict the housing market. I would buy if you feel confident you are going to be in the same area for several years. I would go for the physician loan to avoid the down payment.
 
If your timeline puts you staying there for that long, I would definitely buy. Personally, I'd put all/most of that cash straight into the home because on your combined income, you should easily be able to build cash-flow home repairs and other problems.

Alternatively, it goes without saying, it's a far better financial choice to just choose to live in a low cost of living area. You'll have more money available for travel, kid's activities/sports, and your own hobbies and extracurricular activities. What is it that makes you feel the desire to stay in these VHCOL are?
 
Your title is misleading because I think most come in with the mindset of "don't buy houses in residency lol" but reading the details, it sounds like your spouse is the primary earner of 200k+.

If you plan on being in training for 7-9 years, I think it would likely make sense to purchase instead of rent. Esp when you have a family of 6, I imagine renting a 3bd (minimum) in your VHCOL city may be disproportionally higher than purchasing.

There are probably posters more experienced than me here but IMO if you are staying for minimum of 7 years and your husband basically makes "attending money", it makes sense to buy. Is he in a stable job? You may not need a physician loan to get good rates (sub 3%) and low down payment

Thanks for replying. Didn’t realize the title would cause people not to engage! Ha

He is in a stable job, and stable field in this location that commands a base salary of $200 and usually some benefits; bonuses/stock/etc.

He is the primary earner now for sure. I have a ton of scholarships/fellowships that have made my Fin aid through Med school $130k-$175k so part of that has paid for childcare, COL given my higher COA. We are anxious because in reality we are almost taking a financial hit when I start residency with a starting salary of ~$70k

I didn’t think you could get low downpayment without the physician’s loans and then I heard the interest is usually higher. Plus the added issue that it would be a jumbo loan for average home prices here.
 
If you're married filing jointly, you shouldn't have to pay capital gains unless the sale proceeds are more than $500k. For an individual it's $250k. This applies as long as he lived in the condo at least two out of the previous five years before the sale as his primary residence. I'd still consult a tax adviser because there may be fine print as your husband bought the condo before you got married and I don't know how long into the marriage you have sold it, but in general that's the rule.

We will be married filing jointly for the first time for 2021. The sale just happened and he lived there as primary residence until earlier this year. The “proceeds” also is unclear to me if it’s just sale minus mortgage or all the closing costs, repairs, agents, staging etc. I read online that renovations done before sale could be subtracted from the $500k

It feels very grey area. Agree should consult a tax advisor.
 
If your timeline puts you staying there for that long, I would definitely buy. Personally, I'd put all/most of that cash straight into the home because on your combined income, you should easily be able to build cash-flow home repairs and other problems.

Alternatively, it goes without saying, it's a far better financial choice to just choose to live in a low cost of living area. You'll have more money available for travel, kid's activities/sports, and your own hobbies and extracurricular activities. What is it that makes you feel the desire to stay in these VHCOL are?

As I mentioned I am going into a surgical sub specialty and into academic medicine hopefully. So trying to position myself for residencies that have excellent track records of placing into academia and have the support/resources for my niche research. My top 5 are all VHCOL cities. We also have family ties here, and my husband’s work does better in these types of cities though it would be imposible for him to continue remotely.
 
I didn’t think you could get low downpayment without the physician’s loans and then I heard the interest is usually higher. Plus the added issue that it would be a jumbo loan for average home prices here.
I think this is based on your credit score? We went with a local community bank and did regular loans. My credit score was 800+ so I got 2.85% rate w/ 5% down on a 500k home.
 
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I think this is based on your credit score? We went with a local community bank and did regular loans. My credit score was 800+ so I got 2.85% rate w/ 5% down on a 500k home.

Oh wow. Good to know. I haven’t bought a home before. I thought the credit score only affected the rate. And PMI would be added if less than 20% down
 
Oh wow. Good to know. I haven’t bought a home before. I thought the credit score only affected the rate. And PMI would be added if less than 20% down
Unless it's a physician loan. Then no PMI. And there are physician loans that do 5% or 10% down as well as 0%.
 
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