Why You Should Keep Your Investment Properties in Retirement

March 16, 2022

Whether you have achieved enough financial independence to retire at the age of thirty or the age of seventy, or any age in between, you should celebrate such a momentous achievement. Reaching a level of financial security where you never have to work again is a milestone that is thrilling to achieve. But once you are in retirement, you should make sure you are making financial moves that make sense. A lot of retirees go to sell their rental properties during retirement for access to more cash, which can be a huge mistake. Here are three reasons you should keep your investment properties in retirement.

Reliable Cash Flow

The first reason why you should absolutely keep your investment properties in retirement is because they offer reliable cash flow during retirement. One of the most important things during retirement is regular, consistent cash flow and income. This way you don’t have to be selling assets to get money during retirement. Your rental properties should be cash flowing every single month, giving you monthly income during retirement. This can be especially useful if you have already paid off any of your rental properties and are no longer paying off a mortgage.

Leave Something to Your Heirs

You should also consider keeping your investment properties in retirement so that you have something to leave to your heirs. While you may not think of yourself as someone who has amassed generational wealth, if you own investment properties, you have. Passing on these assets to your children or other beneficiaries when you die rather than selling can give your heirs consistent cash flow for life and set them up for success. If you are going to pass down property, you should do so via a trust, not a will, which has to pass probate court. Probate court is a lengthy process that a trust can help prevent.

Avoid Taxes

The final reason why you should be keeping your investment properties during retirement is to avoid capital gains taxes on your home sales. When you sell a home, if it profits more than 250k or 500k if you are married, then you owe capital gains taxes on what is left over. If you never sell, however, your gains are never realized, and you never owe them. You can instead borrow low interest loans using your rental properties as collateral, and never have to sell your properties to enjoy the gains they have made.

Rental properties are a crucial part of any great retirement plan. Don’t sell and throw away all that hard work. Make sure you understand these three benefits of keeping your investment properties through retirement before you decide to sell.

Check out this article on how to prevent turnover in your rental properties!

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