When it comes to home ownership I am concerned about the up coming fiscal cliff.
As a tax paying home owner I have been blessed. I was able to benefit when my wife and I sold our last home before retirement. We didn’t have to pay any capital gains tax on our first $500,000 in profit. That extra money allowed us to buy a smaller home as well as put a big chunk into our savings.
The idea of tax free profits was so great that some of our friends bought and sold homes every couple of years so they could put money away for retirement. We couldn’t get on board with that plan because my wife is a nester and she didn’t want to move all of the time.
I remember how scared we were when we bought our first home.
Our Realtor convinced us to go ahead and sign on the dotted line when he told us that our uncle was going to help us to make our house payments. He was talking about Uncle Sam. the government allowed deductions on the mortgage interest. We laughed and signed the contract. We have never looked back.
We later bought a condo in Davisand rented it out to our son while he was going to college. We were delighted to be able to deduct all of the repairs. We even deducted the cost of our trips when we drove down to meet the contractors. (And our son)
When our son graduated he moved toOregon. We wanted to sell the condo. When we discussed the sale with a Realtor she advised us that there had been quite a bit of appreciation and we would have to pay capital gains tax unless we exchanged into another property. We thought about it and it made sense for us to exchange into a property that was closer to home. We also realized that the rental income would come in handy when we retired.
We have been retired for two years now and our home is nearly paid off. Owning a home was the American Dream. The interest deduction isn’t as important as it was when we started out but it was our deciding factor.
I have lived the American Dream but what my son and grandchildren?