WITH interest rates so low and uncertainty in the stock market (and the investment world in general) so high, you might be tempted to put your money into something exotic like wine or jewelry.
At least you could drink or wear your investment even if it didn't appreciate in value.
One couple told me their plan to live in nice homes and make tax-free money, which may sound too good to be true. The real estate market has also had ups and downs, not only because of the economy but through local market conditions and the choice of properties.
Any profit you make when you sell your principal residence is tax-free, so some people have made money not only by buying and selling at the right time but by choosing a place to fix up and sell. That's what this couple did very profitably on seven of their nine moves over the past 30 years. Like any investment, you have to know what you are doing and you also have to know the tax rules, or the tax office will say you are in the business of buying, fixing up and selling homes, and tax your profits as full income (not even as regular capital gains). So you need non-tax reasons for moving, like changes in the neighbourhood or the family's situation, for example.
Mike Grenby is a columnist and independent personal financial advisor; he'll answer questions in this column as space allows but cannot reply personally.Email: [email protected].
