I'm trying to understand how cost basis works and if I can use it in my situation.

I've been looking to purchase a home since Fall of '21 and am still actively looking. I'm not in a hurry to move so it may take me another year or even longer. However, because of my tax situation, I have to put down $240K down-payment for the home.

Currently I have that money sitting in a 2% APY savings account but it just bothers me that it's not in the market. I've been investing for the past 17 years so have a decent amount of money in stocks and have invested it over time since 2005.

My investment goal is always to save for the long-term, I don't plan to touch any of the other money for another 20-30 years, other than the $240K that i'll need. If I put that money in the market now, and then need to get it out in let's say 3 months or 1 year, then can I somehow use cost-basis to protect me? For example, from short-term capital gains if I need in 3 months and I can sell older stock (via Cost Basis) OR if it's in a year and the market has gone down then possibly do something else?

I'm not even sure if my questions makes sense so feel free to correct in my math or mis-understanding.

  • How mush do you have invested other than the $240k?
    – D Stanley
    Commented Aug 17, 2022 at 2:09
  • I have invested $1.5M in 401k and brokerage accounts
    – Kamilski81
    Commented Aug 18, 2022 at 1:07
  • You have 1.5M in total investments, and are 20-30 years away from retirement? If this isn't a homework problem, I strongly recommend you seek professional advice, with the goal of becoming educated in what you are invested in. To me, a question like this indicates a surprising level of misunderstanding given your wealth, and you can fix that with proper education. Commented Aug 18, 2022 at 14:09
  • I've been investing for 17 years in mutual funds (stocks mainly). I've never needed $240K of liquid cash so this question is a little different than long term investing in stocks, no? It's a short-term liquid assets question in my opinion. An area that I'm not familiar with: bonds, CDs, other low-risk stuff.
    – Kamilski81
    Commented Aug 19, 2022 at 18:20

1 Answer 1


I'm not completely clear what your question is, but to maybe explain what you can do:

  • You can invest the $240k now, then sell older (> 1 year) investments and only pay long-term gains. You might want to choose to buy different stocks/funds than you already own so that you don't have to specify lots that guarantee you long-term tax treatment, or risk triggering wash sales.

  • If the market has gone down and you want to offset short-term gains with short-term losses, you can sell some of your "newer" investments to offset those gains.

That said, if the goal is only to save for a year or so, a 2% APY account isn't a terrible choice. You are protected from a potential large loss and having to dip into other investments for an expense you know you're going to have.

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