Schwab cash sitting idle while AMT looms

[Jon of Snark]

Sold a small plot in Temecula last fall for $420K. My wife and I skipped the 1031 because we thought the 15% cap gain would be clean but now we're staring down AMT thanks to her bonus and my consulting income. We parked the proceeds in a Schwab money market and planned to reinvest in a duplex but now we're stuck watching the tax bill balloon. I spent hours logging depreciation and carryovers from our old rental in Vista and none of it mattered. Does anyone know if there's a way to offset the AMT with solar credits or a similar option?

 

[postalservice66]

Yep, same thing happened to us. We sold a rental in San Diego in 2023 and didn't do a 1031 either. We thought it was simple, but AMT hit us hard because of my wife's work bonus and my side jobs. We put solar on our house and got the 30% tax credit, but it only helped with regular taxes, not AMT.

The good part is you can use leftover solar credits next year if you make less. It's a good idea to talk to a tax expert to see if other credits or timing can help lower the bill.

 

[Jon of Snark]

We're in the same boat with AMT pressure. I haven't used solar credits yet but I'm looking into timing options for next year. Did you end up shifting any of your funds into tax-managed accounts or just holding cash for now? I'll likely revisit this after Q4 income settles.

 

[Maryb3th]

Sold a small plot in Temecula last fall for $420K. My wife and I skipped the 1031 because we thought the 15% cap gain would be clean but now we're staring down AMT thanks to her bonus and my consulting income. We parked the proceeds in a Schwab money market and planned to reinvest in a duplex but now we're stuck watching the tax bill balloon. I spent hours logging depreciation and carryovers from our old rental in Vista and none of it mattered. Does anyone know if there's a way to offset the AMT with solar credits or a similar option?

Solar credits can help some, but they don’t always offset AMT directly, maybe running the numbers with a good tax pro to see what actually applies in your case is best ?

 

[Jon of Snark]

The consensus seems to be that I need to run the numbers with a tax pro, so I'll get that on the to-do list. In your experience, what moved the needle more for managing AMT, shifting investments into tax-managed funds or being strategic with the timing of your income and deductions?

 

[Alan]

Great discussion here on AMT strategies @Jon of Snark
Has anyone found creative solutions beyond the usual tax managed account route. Would love to see more perspectives on this, I hope we get more insights on this