Second Home: A Retirement Option
According to a recent report from Mortgage Bankers' Association, 43 million American households headed by someone 50 or older owned their main residence and 6.6 million homeowners of that age group owned a second home (often located in well-known vacation areas). Although the second-home market is relatively small, within the next 10 years, the number of second homes is expected to grow by 2 million mainly due to the size of the baby boom generation.
Before the changes in the rules of capital gains, many people did not purchase a second home until they had sold their primary home. That was the rule of the day. That's the way they could roll over any gain and avoid a high tax bill. The changes in capital gain taxes now allow couples to pocket a $500,000 gain (For singles, it is just the half - $250,000) on that primary home.
If you want a place to vacation in now and move to later, try to locate a well-populated area with good healthcare facilities and a job market and also a good school district. You may not need the last criteria for your retired life but a good school district is always associated with greater appreciation of your home value.. Also, if you choose an income-tax free state, that can put about 10% of your income back to your pocket after you move.
Last tip: If you live in your second home at least 2 of the last 5 years, you will again be able to get the same capital gain tax break if you wish to sell. These 2 years need not be consecutive. For example, you could live in your house for a year, rent it for two, move back in for another year and rent it again the year before you sell and qualify for the tax break.
Labels: Real Estate, retirement
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Make sure that when planning for your retirement, you make plans for health and life insurance coverage. Most employee benefits packages will no longer cover you once you have retired which leaves you without insurance when you may need it most. There is guaranteed health coverage available without a medical for those who apply within 60 days of losing their group insurance. Re-evaluate your life insurance on a regular basis, and make sure that it's current in what you would like for coverage. For instance, there is now a hybrid policy that will convert a portion of the amount to disability insurance if needed, otherwise it remains life insurance. This may be a wise alternative for those who wish to have disability insurance.
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