Never Work Again The Michael Ames Real Estate Team San Carlos Real Estate, Belmont Real Estate, San Mateo Real Estate, Redwood City Real Estate, Redwood Shores Real Estate, Foster City Real Estate, Atherton Real Estate, Hillsborough Real Estate, Palo Alto Real Estate, Menlo Park Real Estate

Can I Really Retire on the Equity in My Home?

Absolutely! Home prices have increased so much in this area that many people are retiring on the interest income from their equity!

Over the last few years Bay Area home prices have skyrocketed to stratospheric heights. Many people in the area have owned their homes for some time and owe little if any on their properties.

The difference between what you can sell your property for and what you owe on it is your equity. Less any selling expenses.

When you sell your property and invest the proceeds from that sale wisely, you can actually live comfortably off the interest income from that investment!

Let's take an example:

                                                                 Sales Price:     $875,000
                                               Less Mortgage:     $           0
                                                            Less Sales Costs:     $ 70,000(estimated)
                                 Net Proceeds From Sale:      $805,000

                          Purchase Price of New Home:      $250,000
                                                                 Closing Costs:       $    5,000(estimated)
                                  Total Purchase Expense:     $255,000

                                  Net Proceeds From Sale:     $805,000
                           Less Total Purchase Expense:     $255,000
                                           Income From Sale:    $550,000
                                     Less 23% Income Tax on $305,000 Capital Gain:    $ 70,150 (15% Fed. and 8% State)

                  Net Income Available For Investment:      $479,850
                                  Annual 5% Interest Income:     $ 23,992

Do you think you can live on $24,000 a year? How about if you didn't have a house payment? In the above example the home you buy, you pay cash for. No house payment!

What about income tax? If you have lived in your home for two of the last five years you can write off up to $500,000 per couple on the sale of your primary residence! In the above example your income is only on that which is over $500,000, $305,000. NO TAX! on $500,000!

What about property tax? If you are over 55 and move in the same county or cooperating county your property tax remains the same as it is on your existing home! Wow! This can save you thousands of dollars a year! Again, you must have lived in the property two of the last five years.

I am not an attorney or a CPA so I must emphasize the preceeding information is just that, information. Your situation will most likely be different, possibly much better. These tax laws may change any day. As of this writing they are in effect. The interest rate quoted is an estimate. You may do better or worse. But even if you put your money in the safest investment of all you should get at least 5%.

If this sounds intriguing to you, please contact me for a private consultation. I am experienced in this type of transaction and would enjoy helping you retire and enjoy the life you deserve!

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