Refinance or Invest in CD? Have $$$

[cinder465]

My husband and I bought vacant land 2 years ago for $99K (2 1/2 acres) We used a 100% int. HELOC to pay off the land. Last year we refinanced our mortgage and combined the HELOC and Mortg. Balance. Of course, our mortg. payments increased by around $1K. Last week we sold the lot and now have a check for $109K. Should we refinance once again and put this money toward our mortgage or do something else that may help save in tax penalties? Maybe a 6 month CD??

What are the tax ramifications of this sale? Will we be paying tax on the whole $109K or just the gain?


Optional Information:
Perris, California

Already Tried:
Nothing...accountant suggests a 6 month CD and not to refinance but that makes me nervous. He says "cash is king"...whatever that means. I would think building equity would be better?

[zetta]

There are a number of factors to consider:

1. Do you have an emergency fund of 3-6 months in place?
2. How close are you to retirement?
3. What is the rate on your mortgage?
4. What is your tax braket?
5. Can you itemize the interest on your mortgage?
6. Are there any major expenses coming in the next 5 years that you don't have other savings for? (Such as replacing a car, college tuition, etc.)
7. Do you currently invest in mutual funds, and would you consider doing so with this money?

If you don't have an emergency fund, I would put the money in a CD.

If you're near retirement and not getting the interest deduction, paying the mortgage might be the way to go.

If you're in your early 30's and your mortgage interest rate is low, investing in a balanced mutual fund might be a good strategy.