Selling Stock to Buy a Home: The Math That Tech Professionals May Miss
For many tech professionals, the down payment on a home is not sitting in a savings account; it’s sitting in company stock. Years of RSU vesting and ESPP purchases have built wealth, but it is wealth denominated in shares, not dollars. Converting one into the other raises questions a cash buyer never has to answer.
Two common problems that can potentially trip up stock-funded home purchases are the tax bill, which arrives months after closing and is easy to underestimate, and the ongoing cost of the house itself, which extends well beyond the mortgage payment. Both are manageable with the same approach: Do the math before you start touring open houses, not after your offer is accepted.
Why Selling Stock Can Feel Different Than Spending Cash
Money saved in a bank account has two convenient properties. It has already been taxed, and its value does not change between the day you decide to buy and the day you wire funds to escrow. Company stock has neither.
Most appreciated shares carry an embedded gain, meaning a portion of what appears to be available cash actually belongs to the IRS and, for California residents, the Franchise Tax Board. The share price moves daily, so the number of shares you need to sell to produce a fixed down payment is itself a moving target.
The result, for many buyers, is a lack of clarity about what they can actually afford. Some respond by selling more than they need and paying more tax than necessary. Others sell too little and scramble for cash before closing. Breaking the decision into three steps may help restore clarity.
Step 1: Take Inventory of What You Own
Before you can estimate a tax bill, you need to know the cost basis and holding period of every lot you might sell.
For restricted stock units (RSUs), the basis of each lot is the fair market value of the shares on the day they vested. That value was already taxed as ordinary income through payroll, so only the appreciation since vesting is taxed again when you sell. Shares held more than one year after vesting qualify for long-term capital gains treatment; shares held one year or less generate short-term gains taxed at ordinary income rates.
Shares from employee stock purchase plans (ESPPs) and option exercises follow their own rules, and the details matter. ESPP sales can produce a mix of ordinary income and capital gain depending on how long you held the shares. Shares acquired by exercising options carry basis adjustments that brokerage statements do not always capture correctly.
Your brokerage’s tax-lot detail is the starting point. A simple spreadsheet listing each lot’s share count, cost basis, vest or purchase date, and unrealized gain can turn a vague question (“How much will I owe?”) into something you can actually answer.
Step 2: Estimate the Capital Gain and the Tax
For 2026, long-term capital gains are taxed federally at 0%, 15%, or 20% depending on taxable income, and most tech professionals earning Bay Area compensation land at 15% or 20%. On top of that, the 3.8% net investment income tax (NIIT) applies once modified adjusted gross income exceeds $200,000 for single filers or $250,000 for married couples filing jointly, thresholds that are not adjusted for inflation. California taxes capital gains as ordinary income, at rates as high as 13.3% for top earners.
Put those pieces together, and a high-earning couple in California can face a combined rate of roughly 30% or more on long-term gains and meaningfully more on short-term gains.
Consider a hypothetical example for illustrative purposes only. Actual tax outcomes will vary based on factors including income, filing, status, state of residence, holding periods, cost basis, available deductions, and other tax attributes: You plan to sell $400,000 of RSU shares, all held more than one year, with a combined cost basis of $250,000. That is a $150,000 long-term gain. At a 15% federal rate, the federal tax is $22,500. The net investment income tax adds $5,700 (assuming other income already exceeds the $250,000 MFJ threshold, so the full gain falls within the NIIT’s reach). A California tax at the 9.3% marginal rate adds $13,950. The total is roughly $42,000, more than 10% of the sale proceeds. At higher income levels, where the 20% federal rate and higher California brackets apply, the bill on the same gain can exceed $55,000.
Here is the part that can produce surprise tax bills: Nothing is withheld when you sell stock in a brokerage account. Unlike an RSU vest, where your employer withholds shares for taxes, a sale simply deposits the full proceeds into your account. The tax is due through quarterly estimated payments or with your return the following April. Buyers who spend the full proceeds at closing often discover the bill months later, when the return is prepared and the cash is gone.
Step 3: Work Backward from the Cash You Need
Start with the cash required at closing: the down payment, closing costs (often 2% to 5% of the purchase price), and a reserve you do not intend to touch. Then gross that number up for the taxes on the specific lots you plan to sell, so the sale produces enough after-tax cash to cover all of it.
Lot selection is where planning can pay off. Selling the highest-basis lots first can minimize the current tax bill, and favoring long-term lots over short-term lots avoids ordinary income rates on the gain. The same dollar amount of stock can produce very different tax bills depending on which shares you sell.
Timing matters too. If you are subject to company trading windows, plan your sales during a window and well before your closing deadline. Escrow timelines and blackout periods do not coordinate themselves, and a closing date that lands mid-blackout can force rushed decisions.
Finally, set the tax money aside the day you sell, in cash or a short-term Treasury fund, and treat it as already spent. The estimated payment deadline will arrive faster than you expect.
The Cash-Flow Math After Closing
The mortgage payment is the most visible cost of homeownership. The full costs after closing include several others that buyers routinely underestimate.
Property taxes. In many Bay Area counties, the effective rate typically runs between 1.1% and 1.3% of the purchase price. On a $1.5 million home, that works out to roughly $16,500 to $19,500 annually.
Homeowners insurance. Premiums have risen significantly in many parts of California in recent years, and coverage in some areas has become harder to obtain. A real insurance quote on the specific property gives you the clearest picture, but budgeting a realistic premium up front is a strong first step.
Maintenance and repairs. A common rule of thumb suggests budgeting 1% to 2% of the home’s value per year. In addition to ongoing monthly maintenance costs like landscaping and utilities, there are larger episodic repairs, such as the roof, HVAC, and plumbing. You may not need to spend the full 1% to 2% every year, but the estimate is designed to spread those larger episodic costs across the years you own the home.
Furnishing and early remodeling. Many buyers want new furniture or a round of work done on the home right at the start, and there is a practical reason to do it then: The window before you fully move in is often the easiest time to paint, refinish floors, update a kitchen, or replace fixtures without living around the disruption. The cost, though, deserves a place in your short-term cash flow planning and a check that it fits within your long-term financial picture.
Homeowners’ association (HOA) dues and special assessments. For condos and townhomes, monthly dues are only part of the picture. Review the HOA’s reserves and any planned assessments before you buy.
A buyer who models only principal and interest can underestimate the true monthly cost by thousands of dollars. A more accurate projection of one-time and ongoing costs will help with calculating an emergency cash reserve that will make the first years of ownership feel manageable rather than tight.
A home purchase funded with company stock can go smoothly when the tax math and accurate costs are estimated before the house hunt begins, not reconstructed afterward. If you are planning a purchase in the next year or two and would like help modeling the cash you need ready and the after-tax proceeds from stock sales, I work with technology professionals on questions like this. You can schedule a complimentary consultation directly.
This is intended for informational purposes only. You should not assume that any discussion or information contained in this document serves as the receipt of, or as a substitute for, personalized investment or tax advice from Savant. Please consult your investment or tax professional regarding your unique situation.
Michal A. Zyla
Financial Advisor
CFP®