How Your Home’s Value Can Help You Grow Your Retirement Savings

How Your Home’s Value Can Help You Grow Your Retirement Savings


How can your home be a vehicle to maximize your money into retirement? That’s what we’re discussing today.

Though there are a number of investment strategies you can deploy for long-term financial growth and retirement planning, there are also some lesser-known ways that you can bolster your portfolio. This is accomplished by using your home’s value in the following ways:

  1. You can carry over your tax base via Prop 60 and 90. This often-overlooked method allows you to carry your current tax base to another property of equal or lesser value. Specifically, it gives a homeowner license to take the value of their, say, four-bedroom, two-story home, and move it to a smaller home such as a condo or another property of equal or lesser value.

As such, the homeowner is downsizing, yet also transferring their tax base to the new property; you’ll benefit from significant tax savings and, because you’re downsizing, the assumption will be that you own your home free and clear or your loan balance is small.

  1. You can buy into a duplex. If you’re looking for another source of income, this can be a great option as well. Take the above scenario and say that your four-bedroom, two-story property is worth $900,000 and you’re looking to buy another home. Remember: Anything you buy must be of equal to or less than $900,000.

Let’s say you’re eyeing a duplex that’s valued at $1.2 million, and it’s a 50/50 split as far as what your primary residence will be. In this hypothetical, the home’s value would be $600,000 for the portion you’d be lending in. Factoring in your old property, you’d have a reduced basis for the portion you’d live in. While it’s true you’d have an adjusted basis for the remaining portion, there will be much to gain in tax savings. As a bonus, you could rent out the other portion of the home and increasingly generate income as rent periodically rises.

  1. You can cash out and move out of state. Many retirees or those approaching retirement are doing this because they want to be closer to their grandchildren and other family members.
  2. You can get a reverse mortgage against the home. By and large, this option is geared toward homeowners who don’t plan on leaving their home to a family member. Otherwise, it will eat away at the equity and, eventually, it will either need to be paid back or the property will need to be sold.

If you have questions about this or you have any other real estate-related questions, feel free to give me a call at 562-316-2915 or you can email me at [email protected]. I look forward to hearing from you!

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