One day you
suddenly come to the realization that you've got more space than
you really need. If you're like most near or actual retirees, these
feelings may also accompany the realization that you don't have
as much money to live on during your retirement as you'd like. Don't
despair! Now may be the time for you to trade down -- sell your
current house and either buy a less expensive home or become a renter.
Tax goodies for house sellers
to the Taxpayer Relief Act of 1997, house sellers can more easily
shield from tax a big portion of their house sales profits. Single
taxpayers can avoid capital gains taxation on up to $250,000 and
couples filing jointly up to $500,000 of profit. As long as you
lived in the house as your primary residence for at least two of
the previous five years, this tax exclusion is available to you.
willing to sell your primary residence, the new house sales tax
law makes it easier to convert your home equity directly into liquid
investments you can live off during retirement. Of course, such
a strategy requires you to either trade down or become a renter;
trading to an equal cost or more expensive home won't free up more
of your money.
is a major life change. Take your time in assessing your options
and don't be rushed into making decisions you're not ready to make.
Be sure that you understand the financial ramifications of a move.
At the same time, don't make the mistake of basing your retirement
housing decision entirely on a calculator, while ignoring your personal
needs and emotions.
Getting advice (if you need it)
you just get buried beneath an avalanche of financial questions
in your life -- including whether or not to sell your home -- and
you may need someone to help you dig yourself out. Hiring an objective,
competent, and affordable advisor may be your ticket to better decision-making.
If your experience
is like that of many who have come before you, finding such a good
advisor will be a challenge. Most financial planners work in a way
that creates conflicts of interest -- either because they sell financial
products that pay them a commission or because they manage money
for ongoing fees.
advisors spend the bulk of their time making investment recommendations
and analyzing retirement plans, not helping people like you decide
whether to sell their homes. If you do end up hiring someone to
help analyze your situation, the more educated you are, the better
able you'll be to evaluate that person's competence and to make
efficient use of your advisor's time and, hence, your money.
what expertise you're seeking -- be it tax, legal, retirement planning,
investment advice, or whatever. And remember that a good advisor's
job is to lay out the facts, discuss the options, and recommend
what's in your best interests.
Back To Seller Services