We have an inheritance of approximately 12 million dollars, How much should we spend on a house?

I don't have a large income (>$50,000) so I have to take that into consideration. Would $2,000,000 be too much, or can I spend a little more?

I don't like to answer questions with a lot of previous answers because I worry that I don't have anything new to add, but I have a couple of points that the other answers haven't covered.

taxes, insurance and maintenance will be huge on a $2 million dollar house. I don't what the real estate tax rate is where you are, but nationwide it averages ~1.5% of the house price. Now you have a home with property taxes of $30,000 a year! Your insurance will be much, much higher. A general estimate of maintenance costs on a house are approximately 1% of the value per year - here is another $20,000 a year. This is generally because a more expensive house is a larger house and replacing the A/C or the roof is much more expensive on a $2 million house.

Really your house purchase should fit in well with your other goals. At 40 years of age with 2 young children, I could easily retire on $12 million.

Spend some now - buy a house for cash (the tax break on interest is a sucker's break) for $500,000 or so (maybe even a little more), maybe buy a condo somewhere else (or wait until you discover that spot where you'd like a second home), but a modest new vehicle ($50,000) and invest the rest.

Invested at 4-5% in something save and conservative like Treasuries $11 million would generate ~$500,000 a year. You could own a nice house and even a modest vacation house and pay for your own health insurance and not HAVE to work another day of your life. You can only do this if you keep your expenses down and don't go out buying $2 million houses and Bentleys. That's not to say you can't have a fantastic time on $500,000 a year (even if you need to pay taxes out of it). It just means you don't live like a movie star, you live like an ordinary person (who no longer needs to work).

I wish you luck managing your $12 million inheritance. I sincerely hope that you can handle it and don't end up spending it foolishly. Remember you really could retire for the rest of your life on that kind of money.

good luck!

Why don't you start from the other side? How much house do you NEED?

Yes, 2 million dollars on a house when you've been living on less than 100K is a silly amount to spend. Especially since you haven't dealt with inheritance taxes yet.

What you're asking points at the reason that so many lottery winners end up right back where they started just a few years after winning: they don't know how to deal with the windfall and end up frittering it away on 'stuff' or trying to buy other peoples' love by making exorbitant gifts.

Buy only as much house as you need and can easily maintain. For a couple that's probably a couple thousand square feet, tops. A big house is just an expensive headache for most people.
Pay off all your debts.
Sock away a block of it for retirement. Remember that you'll need as much to live on after you retire as what you currently spend now.

THEN think about luxuries.
Be as careful with a large resource as you are with limited resources. Otherwise, it gets squandered and you end up with nothing to show.

House? Get a house that fits your life style instead of wasting it on junk that you don't need but thinks it's cool because celebrities have them. Take a long *** vacation...go to the Bahamas...heck visit the damn world. When you get back...give some to charities...then use the rest of your money to your heart content. But 700k-1Mil should be enough for a house...don't go overboard because the money is there...always look for the future.

I disagree with mark. It would be foolish to pay interest on borrowed money when you have money in the bank, even for the tax deduction.

A big fat tax deduction would be a good thing if you are paying inheritance tax on 12 million. But do the math. For every $100 you pay to the bank in interest you'll save $35 on taxes. That simply doesn't add up.

I suggest that you buy something that is nice, something that is sufficient for your needs, and something where you can be happy for a long time. I wouldn't put a maximum value on it, but I would try to be reasonable and not blow all of the money on a house. I think $2 million is perfectly reasonable. That would give you $10million left over. Subtract for taxes and you'll still have about $6million in the bank.

If you have $6 million in the bank, you can generate an income of several hundred thousand dollars per year off of the money if you invest it wisely and somewhat conservatively. With no mortgage payments to make and a 6 figure income you should be able to live a life of comfortable luxury without ever working again.

Just use moderation and live off of the interest income. Don't be one of those people who lives large for a few years then ends up back in some dead end job 3 years later when the money is gone.

Enjoy life!

I am a private investor and while many people consider themselves that, I actually do it for a living, for myself. That being said, whether it qualifies me to help you with this question or not, you can take what I say as a grain of salt if you wish, or you can listen.

The first thing you need to do is sit down and write out what you want with life, goals, etc. If you have kids, include their college tuition. Where do you want to retire, what kind of house is ideal, what kind of needs do you have (medical, physical, etc) and how much risk you want to take. This sounds cheesy but what it does is put everything into perspective so you aren't flying by the seat of your pants when you make decisions just because other people are giving you advice. After you do this, cross off the wants that you don't need because these are what will dwindle your account down until you start to learn more about what that 12 mil will ACTUALLY do for you after taxes and expenses, etc. Later on after everything settles down, you can splurge a little, travel, etc and invest part of it in means you wish necessary. MOST important......DO NOT let other people tell you what to do with your money. The simple math you need to understand is 95% of this population only makes 5% of the money so most of the people you talk to will help you lose money! If they don't have what you have, then they don't know what it's like, aren't going through what you are, and don't have enough sense to educate you on what they haven't experienced...period! A couple people said that the 12 mil will generate about 500,000 a year you can live on.. That number will be more around 380,000 or so after taxes are taken out of that 12 mil unless you have an accountant that can help you, which by the way, you need to find a trusted one that knows and understands all the loop holes, tax brackets, and how to utilize large amounts of money to save you as much as you can from the government. Bottom line is you can invest most or all into a government fund and take your 380,000 a year which is about 31,700 a month.. or you can do what I propose below which is what I would do.. (because over time, your net worth will be 4 or 5 times that initial inheritance amount.. basically setting up future generations of your family to be financially secure)

After you pay off all debts, take what you have left.. lets assume it's 8 million after taxes, debt, etc are taken out. Could be more, could be less but we'll use 8 for giggles. Take most of that and put it in a low-no risk fund, cd, bond, etc that guarentees 3 to 4% which if you put 6 million in one, would bring you about 15,000 a month guarenteed income for the rest of your life. The other 2 million, split in half. One million as an annuity which would probably bring in another 4-6000 a month maybe more, maybe a little less for the rest of your life (taking a guess on the monthly from the annuity, you would want to research this a little bit first), but the money you get each month from the annuity, use for your bills... Your bills should NOT go over your annuity. 15,000 a month from no risk investment and another 5,000 from an annuity is 20,000 a month. A 100,000 in car loans is about 2,000 a month, 400,000 house is around 3800, depending on interest and type of loan so thats 5800, leaving 14,200 to bank away. Utilities and interest if done right should be covered by the interest per year you write off on your house....if you have a really good accountant so find one! I can't rehiterate that enough. You also need to make sure you at least have a trusted lawyer. Any and every millionair has got both, a trusted accountant, and a trusted lawyer in their back pocket. They are vital to securing your money so no one else can come take it! There are a lot of people out there that are sue happy for the dumbest things so you need to make sure you incorporate that into your thinking....which most people don't do. Especially if you've never had that kind of money before! Moving on...

The other million you have left from your split you split again... The first 500,000 you sock away in an IRA for retirement because by the time you get there, it will be in the millions.. The second 500,000 you divide out again in half. 250,000 you put into a savings account as a future safety fund... Accidents, tornado hits your house, medical expenses that arise, whatever.. It's not going anywhere, so don't worry about the bank taking it. Just make sure it's not a credit union, even if they offer higher percentages. The second 250,000 is your play money to use in the stock market. I suggest this because right now is a new age in how the market is working. Since you will probably not be working anymore, I suggest you develop a sense of what this market is all about because the more educated you are, the more you will learn, the better off you will be with what your money is actually worth, what it can do, and how

Very original question I think!
I can only answer to what I would do personally. I would consider what I want and need in a house and then do no more than that...still looking for the best buy. It is important to make sure that what you buy will increase in value I think, and not be in an area where it is possible for realty values to decrease. Maybe you should have a home built to your own specifications? I always think about the fact that I would want to spend in a way that my income (if I never had anything else) would be able to pay the taxes and utility bills if anything happened to my money.
Depending on where you live, you can spend well below 2 mil and get a great home that looks like its 2 mill.
Have fun and good luck!

it is all about your wants now isn't it. That all depends on how quick you wish to be broke. Many people who come into large sums of money end up broke. Be modest and never buy more house than you would have bought if you never had this money. A fool and his money are soon parted

Buy as big a house as you need, but not bigger. If it was me, I would buy a small, but comfortable house in a good neighborhood. (you can always upgrade it later, new floors, pool, furniture and so on)

Then I would take the extra money and buy a 2nd house at a beach or some other highly desirable tourist spot. You could then rent it out when youâ€™re not in it and make a little extra income. If I had your money, I would be buying several nice houses at the beach, and hire a property management company to run them for me, (they fix things, and also rent out the home and collect the money.) raw land in a good tourist spot is also a good investment. The taxes on land are also lower. Itâ€™s the best way to keep your money safe.

also, if you have some investment houses, you'll be able to write things off for them on your taxes later. TV's, dvd's thing's like that, an accountant can tell you better.

And buy a few CDâ€™s. if you can have one come due every month, maybe for an equivalent to your current monthly salary, then you wonâ€™t have to worry if the economy turns bad or you get downsized or something. Just be sure not to put them all in the same bank. You want then FDIC insured.

I think 2 mil is too much, but I donâ€™t know the real estate prices in your area. In some places that buys you a palace, in others, itâ€™s only a little over basic. In some places, a house costs 20,000 (Iâ€™d like to find one of those) and other places, $300,000 will only buy you a shack. But with real estate being the way it is right now, I would say you could probably find a nice house in a good area for a mil or less.

A secure future is worth more then a big house.

2 million dollar house and you make less then 50g's?? you should consider spending less due to that you have to pay taxes heat,Electric,phone, cable maintenance on house ,car ,yard care and what ever else comes with it.Not to mention that your a really nice person and is going to donate a lrg portion into your community to help those that are not fortunate as you. elderly being booted outta there homes no jobs unemployment at a all time high,Do you really need to rub this in peoples faces? why not keep 2 million for your self and put the rest into the community maybe start a business to give people jobs , donate a free medical clinic for those with out health care couse they don't have a job maybe start a homeless shelter for those who lost there homes couse they don't have a 12 million dollar inheritance,Bottom line is live with in your means debt free your self and don't be a selfish fool!!

src50 has a great suggestion there. How much house do you need? I wouldn't spend no more than what you can actually live on according to your budget/income per year. Not the inheritance. If you budget according to your "inheritance", then you will run out of money REAL quick and find yourself having to sell your house etc. to make ends meat.
Buy and use what you can afford according to your budget/income that you are making right now! Save the rest for other things that will come along during your lifetime like Medical Bills, Accidents, may be a new car, College for your kids (if you have any), and don't forget Retirement. There are so many elderly people that saved every penny they got, and living off of meager means. Very little money, and it is difficult for them to get medical insurance and they scrape by every month. So, think about that too ok.

If you have a family of five, you, your wife, and two-three kids, get a 4-5 bedroom house, that doesn't cost more than 300 thou. Don't pay it off right away, or Capital Gains will GET YOU!

This all depends on where you live too. You have to think of Property Taxes as well that you will have to pay each year/twice a year on your house/property that you get.

If you want a bigger house, it will cost more to fix if something goes wrong. So budget repairs as well as maintenance on a bigger house before you decide on one. :-)

If you do end up getting a house that is worth 2 mill, then I would strongly suggest saving the rest of your money, and living off of your yearly income. :-)

If your income is modestly comfortable, which I would say it is, you ought not go buying a huge house! Find a deluxe condo, a house in the country where prices are not so high and the acreage is great, or do some research, take your time and figure out how to get the best bang for your buck. With the economy going crazy as it is, I hope you have put your money in an interest bearing CD and not invested it in the stock market, talk to a trust and estates lawyer, you'll be glad you did, as they can best advise you as to how to preserve the money you've inherited without losing it all to the government or in a poor investment.

12 million will get you about 500k annual income without touching the principal. If you bought a 2 mil house, I would not pay cash for it because you need all the tax write offs you can get. It will probably cost you 50 - 75k a year for 15 years for mortgage, taxes and insurance. You could easily afford it.

Personally, I would probably go for a 1 mil house as my primary and then get a 2nd house. I live in the north us, so my 2nd house would be somewhere warmer.

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