Rental Property Investor · San Jose, CA · Member since 2018 · 1 post · 1 vote
Hello all,
I have been living and working in Silicon Valley for the past 7 years savings and investing in the start up company I moved out here to work for. I’ve been fortunate to be given stock options back in 2012, and contributed in the ESPP program offered through my company. Looking to diversify my portfolio and wondering who would be the best professionals to talk to about moving money from my portfolio to purchase rental properties for passive income and long term wealth. Obviously I am wanting to know the ins and outs to minimize penalties including taxes as mush as possible!
Richmond, TX · Member since 2018 · 29 posts · 31 votes
7y
NOTE: I am only a guy in a similar situation - please don't take my observations as legal or financial advice! Talk to some experts! Your situation may be very different!
That said-
A CPA/tax preparer with real estate experience can help with the book keeping and taxes preparation - consult one on the front end of the process to know what records you need to keep.
A fiduciary financial planner is worth a consult to understand and plan for how best to move your money out of your stock options.
I'm in a similar situation and here are my observations: your stock options, RSUs and PSUs are all treated as regular income. They get added to your W-2 at tax time and there is pretty much no way to minimize that. You will probably be best served by selling your stock and then immediately moving that money into a real estate purchase so you can also benefit from depreciation and (if you have a mortgage on the new property) the mortgage interest.
If they are maturing and you aren't in a position to buy some real estate right away, another option is to convert them to regular stock (either in your company or another) and then hold them long enough to benefit from capital gains tax rates (note you still pay income taxes at the time of the initial sale).