Personal Finance (Not Investing) • Talk me out of using box spreads for a home renovation

I have a $200k project coming up. I reduced my intl exposure a few months ago bc my tax liability on the sale is going to be near $0. As a result, I have $120k in cash sitting in a money mkt account allocated to the renovation. I have emergency cash but had planned to sell $80k from taxable in early 2025 upon the project's completion to defer my tax liability to a 2026 payment. My financial picture is as follows:

32% tax bracket
Home Equity: 1.5mm home, 625k mortgage (25 years left at 2.875%), ~875k equity
Cash: 400k
Taxable: 900k
Retirement: 1,145k
529 plans (2 kids both age 5): 130k between both accounts

The more I think about it, the better financing the remaining 80k through a box spread with 3 years to maturity sounds. I would be doing this with SPX options. I have a finance background and am well versed in options. I can borrow the funds at 4-4.5% per annum depending on execution, keep the 80k in the mkt for the next 3 years with no capital gains, and in 2027 have a capital loss on the box spread. The plan would be to allocated $27k of my salary to cash over the next 3 years in a money mkt account earning something >0% and thereby further reducing the cost of the loan via box spread. What am I missing?

Statistics: Posted by jfmiii — Wed Aug 21, 2024 10:28 am — Replies 7 — Views 362

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