If you are planning to retire soon, do you hope your home is your savings bank and will generate cash? Residential homes are the largest asset class in the United States. It’s no wonder that many people planning to retire look to their homes for retirement funds. When selling your home or using its equity, it is crucial to understand tax rules. It is also important to keep records of improvement spending from the day of purchase. Terry Savage, a registered investment adviser and author of several investment books suggests these steps:
When selling your home or using its equity, it’s crucial to understand tax rules and maintain records from the day of purchase. Key points include:
- Two-Year Personal Residence Rule: Excludes $250,000 of gains for individuals ($500,000 for joint returns) if the home has been a personal residence for two of the last five years. Gains above these exemptions are taxed at capital gains rates.
- Cost-Basis Rule: Gains are calculated from the total cost of the house, including purchase price and improvements. Keeping records of all improvements is essential.
- Step-Up Basis Rule: For estate planning, if the home is inherited, its value is based on the date of death, potentially avoiding capital gains tax.
- Using Home Equity: Options include reverse mortgages and home equity loans/lines of credit, both with associated fees and interest.
Maintaining thorough records and understanding these rules can help manage your home’s value effectively. Your home may have had more benefits to you and your family over the years. Make sure you use your home as your piggy bank to help provide in retirement as well.
When Retiring Consider Spruce Point Patio Homes. Colorado Golf Course Homes for an Authentic Mountain Lifestyle
If you decide there are advantages to downsizing in retirement, consider Spruce Point Patio Homes in Montrose, Colorado. Part of Homes at Cobble Creek, Spruce Point Patio Homes not only offer designed floor plans, but are also the perfect fit for a simplified lifestyle. They are available in Cobble Creek Golf Community ideal for retirement living whether you golf or not. Three models are available with three exterior elevations and four garage options. A variety of professionally-designed interior finish packages are available to choose from. The “Lock and Leave” feature that will take care of lawn maintenance and snow removal making it a great home for traveling or as a second home. To learn more about the homes we have available, Call Madison Freismuth at 970-275-0662 or complete the contact form. Take advantage of your home piggy bank and enjoy an active living lifestyle with Spruce Point Patio Homes.
