hi all, i have an investment which will likely have a nice payout as a company where i have an investment will be acquired (knock on wood). I always expected this but was not counting on it so you could say it is “unexpected” in a way. the way the deal is being discussed/structured I believe it will be classified as capital gains and therefore not taxed (my accountant will check)
Anyway, the point is, I was thinking about what to do with money. I will have one vanity purchase (I can tell you what if you are curious and don’t judge ) but the real question for me is with the abolishment of the taxation of imputed rental value for owner-occupied primary residences is it worth to make a one-time amortization? I know the devil is in the details but how are home owners thinking about amortization of their property?
for context, we are a couple, early 50s and both work with 2 kids (17 and 13) and we own a property with a mortgage which we’ve never amortized since it did not make sense. of course we also have investments mostly in VT via IBKR. would you rather forego the amortization and just put it into VT and chill
Personally, I won’t amortize with mortgage rates well below 1%. Even without tax deductions, that’s still pretty low. A one-time windfall of any sort wouldn’t change that.
Based on my asset allocation and situation, I would buy more into pillar 2, at least with part of it and invest the rest. It saves some taxes, has some expected 2-3% return on average, and if mortgage rates go up, I could still do an early withdrawal after the 3-year waiting period.
If interest get higher than pension returns, that’s when amortizing would be an option.
And if they don’t, you don’t that many years until you could either get a higher pension, or cash-out and still invest it in VT, or amortize (or buy more vanity purchases. What is it, by the way, now that you already teased it?).
The devil is too much in the details to really answer this one.
By amortizing your mortgage, you would deleverage and make your allocation more conservative, which can make sense as your wealth grows. What were your plans up to now concerning your stance as your investments grow? Had you considered adopting a more conservative allocation as your wealth grows?
The abolition of the taxation of the imputed rental value is something rather new. I would compute a fictive intereste rate on my mortgage with an added premium corresponding to the taxes I won’t be able to deduct anymore and consider if I would have changed anything had that interest been the one on my mortgage, with the interest rate on mortgages still being deductible and otherwise go along with my longer term plan. Had you toyed with the idea of doing anything with that windfall should it occur?
good point on low mortgage rates. also good thought on pillar 2, it hadn’t occurred to me. the vanity purchase is a Patek Philippe Calatrava, my holy grail watch
indeed at some point a more conservative approach but we’re still active and “young”. 50s is the new 30s right? . truthfully as well, as the kids age the “running” costs go down. it’s definitely a good problem and I appreciate your questions which provoked thoughts
Have you installed the google on your phone? I would type the text on the sweater into the search bar and add ‘sweater’ but I am not an expert in the search enigine domain
I don’t want to offend you but that’s how I re-find the image when I need it
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) but the real question for me is with the abolishment of the taxation of imputed rental value for owner-occupied primary residences is it worth to make a one-time amortization? I know the devil is in the details but how are home owners thinking about amortization of their property?
