There are only a few vehicles to grow your money tax free. Most people think it is the Roth IRA. You pay taxes before you make your contribution and are allowed to withdraw the balance at age 59 1/2 or older without any income taxes due. What if I told you there was a better way?
Real estate - Many people only think about the annual tax deduction they get on their mortgage and forget that a married couple filing jointly can walk away with a cool $500,000 tax free on the gain of their home. Single people can walk with up to 250,000 tax free. The often overlooked tax free investment.
Example: Home purchased in 1975 for $35,000 Home sold in 2010 for $535,000. The married couple get to keep the entire $500,000 gain tax free. In addition their interest payments reduce their taxable basis annually netting them a larger savings over time. This is how the rich get richer- tax loop holes.
Talk about a tax advantaged vehicle!
Take the blinders off when it comes to comparing monthly rent to monthly mortgage because they do not compare.
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good blog, thanks for sharing, in times of crisis, we tend to forget the good things that are still there.
$500,000.00 sounds good to me.
It takes some people 500,000 blogs to say what you said so simply. It's an investment with a far better return than most.
Well there's 500,000 reasons to get excited about! Great job explaining this Nevin.
Nevin -- you nailed it! Short, accurate & important!
Nevin,
Excellent points on saving monies for taxes
By the way, tell Suze Orman to go back to school.
Henry - Good or bad I think a lot of people forget ab9out this benefit!
Temecula short sale specialist - Sounds good to me too!
Andi - LOL funny! Glad I did it in one!
Craig - 500,000 tax free wouldn't suck
Jack - Thanks!
Tagrid - I would love to tell Suze "One size fits all" Orman where to go but it wouldn't be school.
And the same is true, IMHO, if a buyer can get into a home now, at say $150,000, and in 20 years ...
Carla - Absolutely. I'm sure this tax free figure will increase in the coming years so it may jump to 1,000,000 in the next 15-20 years!
Nevin, that's not just a good argument for owning a house! It's also a great argument for marriage.
Patricia - LOL Now there's a twist!
Nevin - excellent information about owning versus renting. You always have great information and I so appreciate it!
Hi Nevin - succinctly put, and oh, so true. I'm re-blogging this one; suggesting, too.
Nevin: Good point...I sometimes forget about that capital gains bonus!
There is nothing like it unless you're GE or something like that. It's easy. It's efficient. It takes some time, but you are only spending money on what you would be otherwise, i.e., rent.
Sharon - Thank you!
Lottie - Thanks for the suggest and i am glad you liked it
Kirsten - It's a big benefit that people forget about. 401K and IRA are taxed hen withdrawn but 500K tax free- good stuff!
Glenn - I would love to be GE for 1 year LOL
Great post, Nevin! Real estate is a good investment, especially when the homes are priced as low as they are right now!
Nevin, you really have offered up some terrific points here about growing your nest egg, even in times without huge appreciation.
Gotta love those 500,000 reasons, Nevin
Jeff
Valerie - Low home prices are another benefit to buying in today's market
Agent Aaron - Ah but we all know appreciation will come back and when it is time to cash out how many other investments allow for tax free cash other than a Roth IRA?!
Jeff - : )
Take the blinders off when it comes to comparing monthly rent to monthly mortgage because they do not compare. Nevin I feel a blog coming upon me-LOL. Queen Pat Kennedy featured this in one of her favorites last week which is how I found this one. Thanks for sharing. Great post.
Back in 2001 my other half and I were the beneficiary of those 500,000 reasons, and at the time we were not married, but we had joint ownership, so the 500,000 reasons were available to us.
Wow -- this is a very good example of why it is a good time to think about buying.. especially if you have many years ahead of you!
Nevin - Thank you for the detailed quality information about tax benefit of owning a home than renting. Excellent blog.
Good case for owning a home. Shelter is a necessity, investment potential a great benefit.
Lanre - Thank you and good luck with the post
Jim - That is an awesome story that I think you should share in a blog. Best advertising is sharing experiences!
Joan - Agreed
John - Thank you!
Gary - Yes and avoiding taxes is my favorite!
Nevin Simple and great explanation to own a home !! Allot of the people on the Forbes 400 are because of owning real estate ....Great Post !!