Transitioning from an apartment to a home in your 20’s or 30’s is certainly an incredibly exciting time, but there are also some benefits to homeownership even after you’ve lived in the home for decades. One of the main benefits of living in the same home for a long time is the satisfaction you receive from making your final mortgage payment. Without the mortgage, this reduces your liabilities which ultimately increases your net worth. Now that you don’t have the principal and interest payments, this frees up cash flow to go towards other spending or saving! If your mortgage payment required escrow, property taxes and homeowner’s insurance would need to be paid separately, so this is a budgeting item to keep in mind.

After you’ve lived in your home for a while, it’s also recommended to put in place a Transfer on Death Deed. This document allows the beneficiary of your choosing to inherit the property and thus avoids the lengthy and costly process of probate.  “That’s great for my beneficiary, but is there anything else regarding homeownership specifically for me that I could take advantage of?” you may be asking and the answer is yes! 

Once you turn 65 (or become disabled), Texas has a special provision called the homestead exemption. This exemption amounts to $10,000 of school district taxes per year. You must be 65 or older and have lived in the house on January 1st of the year being applied for. Exemptions from property tax require applications in most circumstances. Applications for property tax exemptions are filed with county appraisal districts with the general deadline for filing an exemption application typically May 1st of the year in which you turn 65. When you receive the homestead exemption, it is worth noting the “homestead tax ceiling” which is a limit on the amount of taxes you must pay on your residence. If you qualify your residence homestead for the exemption, the school district taxes on that homestead cannot increase as long as you own and live in that home. The tax ceiling is the amount you pay in the year that you qualified for the age 65 or older or disabled person exemption. The school district taxes on your homestead may go below but not above the ceiling amount. 

Paying off a mortgage, having a Transfer on Death Deed, and the Texas property tax freeze are all great reasons to own a home for life! The majority of our clients (including Lockheed Martin employees) own a home and therefore our team of Lockheed Martin Retirement Specialists is aware of the finances and benefits involved. We can also show you how a home impacts the net worth statement and where on the tax return you can find certain home expenses. Homeownership nearly always has a positive effect on an individual’s finances, and we will be glad to assist you in strengthening your situation with our comprehensive approach to financial planning and investment management. We look forward to connecting with you!

For more tips like these, click here to sign up for our weekly email blog newsletter. If you would like to get better educated on Lockheed retirement strategies, click here to download our Free Report titled Retire with Confidence: The Top 4 Things You Can Do Now to Maximize your Lockheed Retirement. And, if you want to have face time with a Lockheed Retirement Specialist², you can click here to schedule an appointmentclick here to sign up for our Lockheed Retirement Workshop or click here to just give us a call (817) 210-3444.

Be sure and check back next week for more incredibly valuable information. Cheers!

Disclosures*

Financial Planning and Investment Advisory offered by SWMG, LLC a Registered Investment Advisor.

Lockheed Martin Retirement Specialist is not an official title or professional designation nor is it conferred by Lockheed Martin on any individual or company.

Our Complementary consultation and free report are for informational purposes only and provided free without any obligation to utilize or retain our investment advisory services.

SMWG, LLC is not affiliated with or endorsed by Lockheed Martin Corporation. Our expertise comes from working with LMT employees for several years and helping them to retire with confidence.

Investing involves the risk of loss, including loss of principal. Past performance does not guarantee future results. Investment products are not FDIC insured, have no bank guarantee, and may gain or lose value. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will be profitable for a client’s investment portfolio.