Advantages Of Buying With Cash

Added February 14, 2006 by Ilyce R. Glink

Print Articles

Summary: Paying off your home early will have you sitting pretty to save for retirement. If you are in the position to live house-payment free (except for your property tax bill each year), that will give you a lot of extra cash to put away for your retirement. Continuing to invest in real estate can also give you big returns and add to your retirement pot.

Q: I am 42 and my husband is 38. We are thinking of selling our house because the value in our neighborhood has gone way up.

Selling would allow us to pay cash for the next house we buy.

If we pay cash for our next property, it would allow us to max out our IRAs and 401(k) plans at work every year. Also, it would be nice to not have a house payment.

Thanks for any advice you could give us.

A: Having the opportunity to be debt-free before you turn 45 sounds pretty good to me. You and your spouse sound like savvy investors who have your priorities in the right place.

If you are in the position to live house-payment free (except for your property tax bill each year), that will give you a lot of extra cash to put away for your retirement.

You might also want to find a house that needs fixing up, in a neighborhood where many homes are being improved. Put a little TLC (tender loving care) into a house that could use it, and you might find in another 5 years or so that this house has also appreciated in value and continued to add to your retirement pot.

The best thing about selling your property now is the tax benefit. You and your spouse can keep up to $500,000 in profits tax-free when you sell, as long as you've lived in the home 2 of the last 5 years. You can use this exclusion once every 24 months.

Unless you're in love with your neighbors and your neighborhood, you're smart to take a little bit of tax-free cash off the table and set yourself up for a golden retirement. Thanks for writing. Good luck.

See more articles on this topic by clicking on the "RELATED ARTICLES" above and to the right.

We have over 5000 articles on Real Estate Advice, Personal Finance Advice and Consumer Advice on our site. We encourage you to look at these articles. As always, if you have a comment on our articles, don't forget to post your comment below. We thank you for coming to ThinkGlink.com.

© Ilyce R. Glink. All rights reserved. This content may not be used, distributed, syndicated, compiled or excerpted in any medium or form without written authorization from Think Glink, Inc. For information on syndicating ThinkGlink.com please contact us.

Previous article Next article