9 things you can do to cash in on your NJ real estate home
Homes make up the majority of even a moderately affluent pre-retiree’s wealth, ahead of pension and Social Security income. According to research done by the Society of Actuaries, only about 20% of homeowners plan to use the equity in their home to help finance retirement. Of those who do, a small number of have thought about tapping their NJ real estate home’s value and merely plan to sell it to produce retirement money.
See below for 9 ways you can cash in on your home:
Downsize Home Expenses
For many retirees, the best thing to do when it comes to housing is to move to a smaller home whether it be in a different state or country that offers drastically lower living costs. NJ real estate agents caution homeowners to not be trapped in their home by memories or old possessions that can weigh them down emotionally and financially.
A 5-year Adjustable Rate Mortgage can be found for less than 3% in some markets today. If you know you will be selling your home within 5 years, getting a five-year ARM can enable you to pay down the principal balance on your loan and retain more of the equity for yourself when you sell the NJ real estate property.
Pulling money out of your NJ real estate is often not recommended in the case it is needed for basic living expenses. Lenders also need to know you will be able to repay the loan. One wise economical use of home-equity loan money is to remodel your home to make it, say more “senior-friendly,” so you can continue to live there in comfort as you age.
Reverse mortgages allow you to borrow against the equity in your home while living there as long as you would like, provided you continue paying NJ real estate property taxes, home insurance premiums, and maintenance expenses. Although reverse mortgage fees have been criticized as being unaffordable, the government recently began supporting a less expensive home-equity-conversion mortgage called the HECM Saver loan.
Nontaxable Home-Sale Gains
Gains on the sale of your current NJ real estate home are tax-free up to $500,000 for a couple provided you have lived in the home for 2 of the past 5 years.
Mortgage-Interest Tax Break
Interest payments on your home are still tax-deductible, and you are eligible to deduct the interest on home-equity loans as well. Interest deductions seldom turn a bad decision into a good one, but they should nevertheless be included in your evaluation.
Rent Out a Room in Your Home
Although it can be hard to let a stranger into your home, it can be more difficult to afford your home on a retirement income. The best advice is to talk to friends or family who have done this and learn from their experiences, both good and bad before you choose to go through this.
Rent Your Whole Home
According to tax experts, if your home is rented for less than 15 days a year, the money you receive does not need to be reported as gross income on your tax return. Also keep in mind that if you are planning to take a long vacation, your home will most likely be safer if it is occupied by a trustworthy tenant as opposed to leaving it vacant.
Energy Tax Credits
Some energy tax credits were extended into 2011, and there are continued tax credits for solar and other alternative energy investments in your home.
The real estate market is changing rapidly and expanding into new avenues almost daily. Sometimes it can be very difficult to find the answers you need on a specific topic or issue. In times like these, you need a real estate professional who will provide valuable information and trustworthy advice. For more information on NJ real estate, call us today or click here to be connected with one of our top real estate specialists.