Calculator Author: Hans Goldstein, NPN 20602398 Updated: 2026-06-27

Home Sale Proceeds — MYGA vs CD vs T-Bill vs HYSA (5-Year Net)

TL;DR: Sold your home and need to park $300K-$1M+ for 5 years before deciding the next move? Compare four common parking spots side-by-side with full Section 121 exclusion, LTCG, state tax, and ongoing yield tax baked in. MYGA usually wins on after-tax for high-bracket sellers, but the comparison depends heavily on state and yield assumptions.

Home Sale Proceeds: MYGA vs CD vs T-bill vs HYSA

Net after-tax 5-year balance across all four parking spots. Section 121 exclusion baked in.

Home sale price ($)

Cost basis (purchase + improvements) ($)

Selling costs (commission, etc) ($)

Section 121 exclusion

LTCG + NIIT rate (%)

State income tax (%)

Ordinary bracket (%)

MYGA 5-yr rate (%)

CD 5-yr rate (%)

T-bill avg yield over 5 yrs (%)

HYSA avg yield over 5 yrs (%)

Net proceeds after sale tax (to invest)

After LTCG + state tax on the taxable gain above Section 121 exclusion.

Vehicle	5-yr gross	Annual tax	5-yr net after-tax

Find best MYGA for my home sale

T-bills are state-tax-free at federal but federally taxed yearly. CDs and HYSA are fully taxed yearly. MYGA defers tax until withdrawal — usually the winner on after-tax over 5 years in high-bracket / high-state-tax households.

How this calculator works

Three layers of math:

1. Sale tax:

Realized gain = Sale price - Cost basis - Selling costs
Taxable gain = max(0, Realized - Section 121 exclusion)
Sale tax = Taxable × (LTCG + NIIT + State)
Net to invest = Sale price - Selling costs - Sale tax

2. Section 121 exclusion: $500K for married filing jointly (must have lived in home 2 of last 5 years). $250K single. $0 if not primary residence.

3. 5-year vehicle math:

MYGA (deferred): P×(1+r)^5, then tax gain at end at combined rate
CD (taxed yearly): P×(1+r×(1-t_full))^5
T-bill (federal-tax-only): P×(1+r×(1-t_fed))^5
HYSA (taxed yearly): P×(1+r×(1-t_full))^5

What the result means

Net proceeds after sale tax is the dollar amount you actually have to invest. For a $950K sale by a married couple with $450K basis and $60K selling costs in CA: gain = $440K, exclusion = $500K, taxable = $0, net = $890K. For singles or rental properties, the numbers move dramatically.

5-yr after-tax comparison table ranks the four vehicles. For most high-bracket sellers in 5+ year horizons, MYGA wins by $20K-$60K over a CD or HYSA.

Treasury ladder is competitive in high state-tax states because of the state-tax exemption on T-bill interest.

When MYGA wins / when the alternative wins

MYGA wins when: 22%+ federal bracket, any state tax, 5-year horizon, $250K+ to invest. Most common winner.

T-bill ladder wins when: very high state tax (CA top, NY top) AND you need cashflow without surrender constraints.

CD ladder wins when: you want FDIC, are okay with lower yield, and want predictable maturities.

HYSA wins when: you might need full liquidity at any moment (selling another home, buying a business). Pays less but full access.

Worked example

Scenario: Married CA couple sells primary home for $950,000. Bought 15 years ago for $450,000, put in $60K of selling costs. Section 121 $500K exclusion applies.

Realized gain: $950K - $450K - $60K = $440K
Taxable: max(0, $440K - $500K) = $0 (fully excluded)
Net to invest: $950K - $60K - $0 = $890K

5-year vehicle comparison (24% fed + 9.3% CA bracket):

MYGA 5-yr @ 5.85%: end $1,184K gross, after-tax ~$1,084K
5-yr CD @ 4.40%: ~$1,031K (taxed yearly)
T-bill ladder @ 4.20%: ~$1,037K (federally taxed only)
HYSA @ 3.80%: ~$1,013K

MYGA wins by $47K-$71K over 5 years on this scenario.

Common mistakes

Forgetting Section 121. Most sellers under-claim eligible exclusion. Lived in home 2 of last 5 years = $250K single / $500K joint exclusion off gain.
Not adding capital improvements to basis. New roof, kitchen remodel, additions — all add to cost basis. Document everything.
Ignoring NIIT. Net Investment Income Tax adds 3.8% on capital gains for high earners (single MAGI > $200K / joint $250K).
Treating sale as ordinary income. Capital gain rate (typically 15% or 20%) is much lower than ordinary income rate. Don't conflate.
Locking everything in a 10-yr annuity when planning to buy another home in 3-5 years. Pick a term matching your actual horizon.

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FAQ

Q: How does Section 121 work?
A: If the home was your primary residence for 2 of the last 5 years, you can exclude up to $250K of gain (single) or $500K (married filing jointly) from capital gains tax. Once-every-2-years use.

Q: What about depreciation recapture on a rental?
A: Any depreciation taken (or allowable) is recaptured at 25% federal rate — on top of capital gains tax on the remaining appreciation. Different from Section 121 exclusion (which doesn't apply to rentals).

Q: Are MYGAs the right place for home sale proceeds?
A: Depends on horizon. If you might buy another home in 2 years, MYGA is wrong (surrender charges). If you're parking for 5+ years before deciding next steps, MYGA usually wins after-tax.

Q: What if I sell at a loss?
A: Loss on personal residence is NOT deductible. Loss on rental is deductible against ordinary income or capital gains.

Q: Do T-bills really avoid state tax?
A: Yes — T-bill, T-note, and T-bond interest is exempt from state and local income tax (federal law). Saves CA top bracket holders 13.3% on each dollar of T-bill interest.

Q: Can I 1031 the home sale?
A: 1031 is for like-kind property exchange (typically rental to rental). Primary residence sales use Section 121 instead.

Q: Should I just keep it in cash at the bank?
A: Bank checking pays nearly nothing. HYSA at 3.80% beats cash by ~3.5%/yr. Even HYSA loses to MYGA over 5 years — the cost of 'safe and liquid' is real.

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Hans Goldstein · 213-414-2808 · NPN 20602398, independent licensed insurance producer appointed with multiple A-rated carriers

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Disclosure

This calculator is for educational and illustrative purposes only and is not a personalized recommendation, solicitation, or offer of any specific product. Outputs are approximations using publicly available rates, IRS tables, and standard payout factors as of 2026; actual carrier illustrations may differ. Annuity rates, caps, payout factors, surrender schedules, and tax brackets change frequently. Always confirm current values against the most recent carrier disclosure document, IRS Publication 590-B, and the actual contract before purchasing. Hans Goldstein is an independent licensed insurance producer (NPN 20602398) appointed with multiple A-rated carriers. Tax discussion reflects federal law as of 2026 and is subject to change. Consult a CPA and licensed advisor before acting on any output shown.