Southern Maryland homeowners weighing cash against financing for a kitchen remodel often have savings tied up in stocks and other investments. If that describes you, selling them to pay cash may create a tax bill of its own.
How Promotional Financing Is Typically Structured
Promotional financing on a home improvement purchase, whether a reduced rate or a set period with no interest, is usually funded by the lender charging the contractor a fee rather than by raising the homeowner’s price. Ask your project specialist how our financing options are structured and whether the total changes depending on how you pay.
A promotional offer might only save you money when the lender’s fee stays separate from your price. Because of that, a kitchen remodel in Southern Maryland often costs the same whether you write a check or borrow, and the comparison rests on what paying cash itself costs.
What Selling Stock to Pay Cash Costs
Capital gains tax on selling stock in Maryland applies to the gain, meaning the sale price minus what you originally paid, and it arrives in layers. The opportunity cost of paying cash for a remodel starts with that bill.
Federal Tax on the Sale
Holdings you have owned for more than one year are taxed federally at 0%, 15%, or 20%, depending on your bracket, according to the Internal Revenue Service (IRS). If you file jointly and your modified adjusted gross income, which is adjusted gross income with certain items added back, exceeds $250,000, you can also owe a 3.8% net investment income tax on some or all of the profit.
Maryland and County Tax on the Sale
Maryland taxes that same amount at its own rates, and your county of residence, whether St. Mary’s, Calvert, or Charles, adds a local share on the return. Since 2025, the state’s capital gains surtax has added another 2% on top once your federal adjusted gross income passes $350,000, according to the Comptroller of Maryland.
For illustration, if you are in the 15% bracket and sell $24,000 of taxable long-term capital gains, you would owe roughly $3,600 in federal tax alone. Your state tax, your county’s local share, and, if you cross the $250,000 and $350,000 thresholds above, the net investment income tax and state surtax can add several percentage points on top of that. Financing the remodel and clearing the balance before the bill comes due avoids that sale entirely, and your holdings stay invested, free to rise or fall with the market.
Working Capital in a Business
If you own a practice or a company, you face a variation of the same math. Money handed to a contractor is no longer available for payroll or inventory, and capital that would otherwise earn a return inside the business stops earning it while it sits in cabinetry and countertops. Financing keeps those dollars working while you retire the balance over time.
Timing a Kitchen Payment Around Tax Years and Medicare
A stock sale adds its gain to your income for the tax year in which it happens, and both Maryland and Medicare charge more once your income passes set thresholds. Bonus and equity compensation often make pay uneven, so an identical transaction can cross a line on one return and stay clear of it on the next filing.
Financing lets you divide a liquidation across two calendar years instead of one, splitting the gain between two filings. A tax professional can model whether that split helps in your particular case.
If you and your spouse file jointly with modified adjusted gross income above $218,000, you pay an added $81.20 a month for Medicare Part B and $14.50 for Part D per person at the first surcharge tier in 2026, according to the Centers for Medicare & Medicaid Services (CMS).
Social Security generally relies on the return filed two years earlier, so a gain you realize in 2026 would show up in 2028 premiums, and those thresholds have not yet been published.
Medicare’s surcharge tiers are flat amounts, so if you cross a tier’s income threshold by even one dollar, you pay the full charge for that tier rather than a prorated share. A large withdrawal or a stock sale can raise your Medicare premiums two years later if it lifts your household past one of those lines.
Reading the Fine Print on a Promotional Offer
A promotional financing period is a legitimate loan feature, and the structure behind it decides what a missed payoff date costs you. Deferred interest and a 0% annual percentage rate (APR) sound alike, but under deferred interest, any balance you leave when the offer ends brings interest charged back to the original purchase, according to the Consumer Financial Protection Bureau (CFPB).
The agency has encouraged lenders to use 0% APR promotions instead of deferred interest, since they carry less risk for consumers, and it notes that the required minimum alone may not be enough to satisfy a promotional balance before the offer ends.
Divide what you owe by the number of months left on the offer to find the figure that will. Ask your project specialist which of the two structures applies to your financing before you sign.
When Paying Cash May Be the Better Choice
Writing a check removes the need for a lender altogether, along with the monthly payment, the promotional deadline, and any chance of an administrative error. For some homeowners, that certainty may be worth more than the tax bill from a sale. The case for financing weakens if your money sits in ordinary savings or in holdings with little gain, since a withdrawal then adds little to your income.
Schedule Your Complimentary Design Consultation
Southern Maryland Kitchen and Bath offers a complimentary design consultation to homeowners planning a kitchen remodel in St. Mary’s, Calvert, and Charles counties. If you’re weighing cash against financing, contact our design team or call (301) 241-0702 to set one up and bring your questions.