Personal Use Real Estate: How Much Is Too Much?
Welcome to the Wealth Curve Talk Podcast. In this episode, John continues his series on the Wealth Curve Blueprint. This time he talks about personal use real estate and what portion of your gross income it should consume.
John is the author of 5 Ways Your Wealth is Under Attack and It’s Your Wealth – Keep It.” He has lectured extensively on financial planning and is a recipient of the Five StarSM Wealth Manager Award.
John’s strength is his ability and commitment to improve the level and quality of the financial planning process.
His dedication to his clients’ growth involves an evolving strategy. His focus is to meet the demands, desires, and needs of his clients in a changing economic environment.
This episode’s key points:
- Personal use real estate refers to your primary home, your second home, timeshares, and any real estate items that are for your personal use on an ongoing basis. These are not rental properties.
- You should cap your real estate spending (mortgage principal, mortgage interest, and real estate taxes) at 25% of gross annual income as long as you are in the wealth accumulation phase of life.
- If more than 25% is allocated for these things—across all of your properties—your odds of saving enough are too low.
- Don’t buy more house than you can furnish and maintain—inside and out—and pay your taxes on.
- Also, the new tax law won’t help you—the deduction for combined state and local income taxes (SALT) is now capped at $10,000.
- Lastly, you have options. You may need to sell a property, or you may need to make adjustments in your financing. Your solution will be unique to you.
Personal use real estate has a profound effect on your liquid asset rate, savings rate, savings rate balance, and tax rate. For more, listen above.
If you are new to Smallwood Wealth schedule a Wealth Curve Conversation here.
Schedule a time to come in and make your Wealth Curve Blueprint and Scorecard.
Call us at 732-542-1565 and let us help you get your plan optimized.
Podcast: Play in new window | Download