Case Study – Housing Decision During Retirement
Posted by Mary Cox on
A couple is planning to tour the United States in a travel trailer during their first few years of retirement. They are going to sell their current home now and purchase another home when they finish their travels.Â
An interesting exercise is to determine the optimum time of selling the home: now or when they’re ready to buy their replacement home.
If they intend on traveling for more than three years, then, it may be a good decision to sell prior to the sojourn to avoid paying taxes on the gain in their home. IRS allows for a temporary rental of a principal residence while still keeping the $250,000/$500,000 capital gains exclusion intact. A homeowner must own and use a home for two out of the previous five years which means that it could be rented…
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