Business —_ — - RETIREMENT PLANNING The best tax shelter is your private home MOST ARTICLES on retirement planning discuss RRSPs, annuities, and RRIFs, etc., when the very best and simplest tax shelter of all — your own home — is frequently ignored. All taxpayers, married or single, should consider the advantages of home ownership as a tax shelter and retirement fund. Very few of us could consider a house purchase without a mor- tgage. Which raises the question, how keavily should you borrow to ouy a house rather than rent? Logic and arithmetic wil! frequent- ly indicate that this is not always a good idea. However, the satisfaction of owning your own place is supplemented by the forc- ed savings aspect of having to pay off the mortgage. Pride of possession will also en- courage the spending of money on improvements rather than con- sumer items and entertainment. Although the real estate market fluctuates and speculators fre- quently get ‘‘burned’’, the family home almost always accumulates in value over the long haul. And remember, the capital gain is tax- free. Furthermore, you will be liv- ing ‘‘rent-free’’ and this is a tax- free benefit as compared to other forms of interest earnings. Once you have acquired your home your first priority should be CEC Television Sales “Allan Sommerfeld, Manager of CBC Regional Television Sales, Vancouver is pleased to an- nounce .the appointment of Richard J. Merritt to the newly created position of Co-op Coordinator. Prior to joining CBC Television Sales, Rick worked in a sales capacity within the private sec- tor for a number of years. Rick will be involved in the development of a co-op advertis- ing program, working directly with both manufacturers and retailers. CBC Television Sales continues in its effort to further enhance the many advertising opportunities available to their clients.” By BERT WICKHAM Contributing Weiter to pay off your mortgage as quick- ly as possible. The interest you pay to the mortgage company is not tax deductible so it doesn’t make sense to invest to produce taxable income while you still have mor- tgage debt. if you feel uncomfort- able without some safe investment reserve such as Canada Savings Bonds, etc., then borrow the money to buy them. The interest will be tax deductible. At retirement, if you have enough other income for groceries, etc., then your mortgage-free house represents an inflation- proof, rent-free home for as long as you feel able to maintain it. On your death it will pass to your heirs free of tax so it also represents a valuable estate asset and you can feel more comfortable using your other capital to live on, as you will still have a valuable legacy for your family when you die. On the other hand, you may prefer to sell and ‘trade down’’ into something smaller. Or you may prefer to rent and use all your equity to provide income. There are two tax aspects which favor either of these strategies. Firstly, your capital gain would be tax-free so all your equity would be available to produce income. Secondly, any income produced by, say, a prescribed annuity, would be only partly taxable as compared to the fully taxable in- come from an RRSP. So, don't overlook the family home as a_ tax-free retirement fund. It can be a great ‘‘shelter’’ in more ways than one. tee Bert Wickham is one of B.C.'s foremost authorities on financial planning for retirement. This series of articles is designed to help you make the most of your income in retirement and keep your taxes to the legal minimum. However, as they are of a general nature, readers are advised to check cayefully before applying them (o their personal situation. 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