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Annette Masterson

How Home Ownership Fits Into Your Retirement Plan

June 2nd, 2017 at 1:04 am by Annette Masterson

If you’re nearing the age where you are thinking about your retirement plan, you may have started to wonder how home ownership can fit into those plans. No matter if you’ve owned your home for years or you hope to use home ownership as retirement income, keep reading to learn how owning a home can be beneficial to you in your later years:

– If you have a sizable amount of equity in your home, selling your home when you’re in your retirement years offers you a couple of options. For one, you could downsize to a smaller home and take the difference and use it for retirement income. Or if you have other viable living arrangements (for example, living with children), you could sell your home and use that entire amount as retirement income. The IRS allows you to profit up to $250,000 for a single person or $500,000 for a married couple without having to pay taxes on it. If you add in the total equity on your home, this could turn out to be a large and useful sum of money in your later years.

– Another way to incorporate home ownership into your retirement plan is to purchase or retain rental property so that rental payments can be used as income. One benefit of rental income is that the income from this does not count as earned income and therefore does not reduce Social Security payments. You would have to pay taxes on the income, of course, but these payments can be reduced by deductions and this can end up being nice supplemental income for those in their retirement years.

– One little known way to incorporate home ownership into your retirement plan is by using money from your IRA, or individual retirement account, to purchase investment property that will be occupied by a tenant; it can’t be a primary or vacation home. Of course the income generated from this property purchased with IRA funds has to be used in line with the required timeframes for withdrawals and distributions so that you don’t pay additional taxes and penalties. Not all of the funds have to come from your IRA, so you can “partner” with your IRA at any percentage. This is a great way to invest tax-free and not have to pay taxes if you’re using money from a Roth IRA!

Of course before you make any decisions regarding your retirement plan, be sure to consult your retirement advisor to ensure that you’re making the best decision for your situation.

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Annette Masterson is a licensed broker with EXIT Realty in Murfreesboro, TN. She has developed one of the most successful real estate teams in Rutherford County, known as Masterson Network Homes, that specializes in new home construction and residential listings and sales throughout Middle Tennessee. You can email Annette at or call her at 615-896-5656 for more information.

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