When did you build your retirement and why

[Foodeefish]

I have purchased the property to build our retirement home and plan to move there in 5-7 years, selling our current home and paying cash for the construction of the retirement home.
How far in advance did you build your retirement home and what are the tax advantages of building sooner rather than later?

 

[Nords]

I have purchased the property to build our retirement home and plan to move there in 5-7 years, selling our current home and paying cash for the construction of the retirement home.
How far in advance did you build your retirement home and what are the tax advantages of building sooner rather than later?

The people I've talked to who've build their dream houses all say "Never again." After watching HGTV for a few years I'm inclined to agree. However long you're told it'll take to build the house, double it. You'd rather be pleasantly surprised than homeless.

We were in the middle of a difficult career transition when we unexpectedly found our own dream house-- I was two years from retirement and spouse was considering leaving active duty. It also involved leaving a great elementary school for one that seemed OK but... the clincher was that the house was selling for a tremendously low price and we would get a fantastic lot in a great neighborhood. Five years later I still can't believe we're living here.

I don't know of any tax advantages to building early, unless you're planning to get a mortgage and want to do so before rates rise any further (if they do rise further). Selling your house allows you to realize tax-free gains but there's no longer a deadline to putting the money into a new home. So if you're still committed to building your own retirement home, start waaaaaay early to ride out the delays & problems. I doubt you'll have to worry about renting it out before you can move there.

 

[Mr._johngalt]

The people I've talked to who've build their dream houses all say "Never again."  After watching HGTV for a few years I'm inclined to agree.  However long you're told it'll take to build the house, double it.  You'd rather be pleasantly surprised than homeless.

We were in the middle of a difficult career transition when we unexpectedly found our own dream house-- I was two years from retirement and spouse was considering leaving active duty.  It also involved leaving a great elementary school for one that seemed OK but... the clincher was that the house was selling for a tremendously low price and we would get a fantastic lot in a great neighborhood.  Five years later I still can't believe we're living here.

I don't know of any tax advantages to building early, unless you're planning to get a mortgage and want to do so before rates rise any further (if they do rise further).  Selling your house allows you to realize tax-free gains but there's no longer a deadline to putting the money into a new home.  So if you're still committed to building your own retirement home, start waaaaaay early to ride out the delays & problems.  I doubt you'll have to worry about renting it out before you can move there.

We bought 7 acres in rural Texas. Beautiful. Plan was to build a
"ranchette" and relocate. Then reality intruded. It was messy,
burdensome, annoying and expensive. I grew weary quickly and sold
the land (broke even) about the same time we bought the condo.
DW still laments the sale of the "ranch". Me too, but it worked out okay.
I have never built a home from the ground up and it appears now that
I never will. No regrets.

JG

 

[REWahoo]

We did what JG didn't: built a Texas "ranchette". Didn't find it particularly messy, burdensome or annoying, but it wasn't inexpensive.

We are probably not typical in that we built our dream/retirement house 20 miles away and lived there for my last 7 years in the working world, until the mortgage was paid off. Yes, it did take two months longer than we thought it would to complete construction (8 mos. vs. a planned 6 mos.).

Ten years ago we bought 5 acres of raw land, thinking that we would build our retirement home just before I retired, planned for 9 years in the future. The more we planned and dreamed about moving to our dream house in the country, the more impatent we got to just do it. The local RE market improved and, two years after we purchased the property, we sold the house, signed a one year lease, and started building.

Building your dream house via long distance is a challenge I've not experienced. We were close enough to visit the building site almost daily and keep an eye on every aspect of construction. (Yes, the builder and I got to know each other very, very well. ) But all said, it wasn't a bad experience and I wouldn't hesitate to do it again if I needed to.

 

[just_hatched]

I was two years from retirement and spouse was considering leaving active duty. It also involved leaving a great elementary school for one that seemed OK but...

Did your new classmates tease you about being the new kid on the block?

 

[brewer12345]

I have purchased the property to build our retirement home and plan to move there in 5-7 years, selling our current home and paying cash for the construction of the retirement home.
How far in advance did you build your retirement home and what are the tax advantages of building sooner rather than later?

Foo, I think the responses thus far indicate something important: building your dream retirement home is expensive and time consuming. Most people here are financially conservative, so spending a lot of time and money on a custom home is nt likely to be a popular choice here. Doesn't mean its a bad idea, just that most FIREd folks don't do it.

I can't think of any tax advantages for building a retirement home early unless A) its a rental before you moe into it or B) you take out a mortgage on it.

 

[Calgary_Girl]

I don't have the patience to go through the hassle of building a dream home. DH and I found a home that we both liked and that fit our needs almost 5 years ago. We've just had our basement renovated and that was enough disruption for me (although it only took 6 weeks and we had a great contractor ). I expect we'll stay in our home until we're old and gray since it's in a great location and then downsize to a condo or townhome and travel as snowbirds.

 

[Howard]

I bought a building lot in an area we wanted, found a builder who had been there for many years, built the house with no major problems.

Toughest job is picking out the fixtures, both light and plumbing, most of which I left to my wife.

I built in 1999, cost was $110 sq ft, now it is over $170 a sq .ft due to large increases in material costs.

I want to build another one, getting a wee bit of resistance, she quite likes her nest and our neighbours are great.

 

[punk]

We got moved into our retirement home this past July. Built on 35 acres we own, approximately 2 hours from work. DW is retiring in May 06' and will be there full time. Took 13 months to build and had a great relationship with builder, whom we've known for years. Some minor problems, but none that would scare us away from doing it again. Spend every weekend and holidays there now. It is a great mini-vacation set up until full FIRE. Will be joining DW in full time RE in Jan. 07'. Will sell the house here. Daughter, SIL, and two grandchildren live in a home on the land full time so have someone there to "watch" after the place, which relieves some worry of being away during the week. Traffic is constant outside the office window at work, if anyone comes by other than the mail carrier at the "ranch", it is a really big deal.

 

[TargaDave]

We almost bought a waterfront (future retirement) house last year. Looked at rental income and tax writeoffs and decided it just wasn't worth the hassle to buy "early" in such a frothy market, especially since we were 8 hours away (might have made emotional sense if we were closer). It certainly was not a great cash on cash proposition without further 15% annual appreciation rates. Now that the market is showing weakness we are not in quite the same rush.

 

[SteveR]

We bought a wetlands frontage lot and spent two years designing a house to fit on the lot. It was to be our retirement house until we get estimates on what it was going to cost to build.

We then decided to both ER and move closer to family and to a less expensive area. We did and never built the house. We sold the lot and used the equity in that and the house to put into a house here. We will live in it for a few more years and then downsize with no mortgage.

I have built a few houses from the ground up and while it is a lot to keep track of, it is not as bad as many would have you believe. We don't plan on doing it again but I could and it would be more fun while not working full time. Time will tell.

 

[kz]

Our plan was to buy a country lot right after hubby retired in May and start construction in 2006. Unfortunately the plans are on hold for the next yr or so. DS#1 found out he was getting shipped out to Iraq so he and his gal decided to buy a house (locally) and get married before he left. For the time being we're staying put since we're only 5 miles from her and she needs our help til he returns.

We had the house we live in built for us almost 20 yrs ago and have no problem doing it again. We're looking at the bright side in that we have more time to accumulate things that will be needed for the house and examine the plans and ideas we have a bit more thoroughly.

 

[tryan]

Currently building water front on land I did a 1031 exchange for 2 years ago. Construction is 4 months behind and with winter setting in it'll be awhile. "Never-again" sounds pretty good right now. Good news is water front home values have roughly doubled in the area, so a delay or cost increase is bearable.

It'll double as a vacation rental until my kids are out of the house (no decent schools in vacation-land; moving early is not an option).

As far as tax implications - I envision another 1031 exchange if renting/maintaining becomes a hassle. The flip would be into another dream home (in the same school district) which would be rented for a year to pacify the IRS "like exchange" rule. Then become our primary residence; selling our existing home also tax free.

Point being, disposable real estate can produce lots of options.

 

[Sarah in SC]

We sold a beach house and bought waterfront acreage out in the country. The idea was to have less mortgage so it could be paid off well before retirement (mortgage will be gone in 4-5 years, RE in 9). It worked out better than expected, as I was the general contractor and oversaw ALL construction (worked with a great architect on my floor plan). I subbed out most of major work, but DH did the electrical and I did the insulation. It came in at $90 sq ft and we intend to stay here through active years of retirement, then sell it before the "not climbing stairs" part of retirement. We'll be ready to quit the tractor work by then!

I'd say if you don't have a reason to stay in the (presumably) higher priced area you now live, you will benefit from the lower taxes (one hopes) of your retirement location (for us, from the beach to the county) and less conspicuous consumption from the neighbors (except that pretty new John Deere tractor... ). Building ourselves allowed for cost-effective decisions on materials and layout, from groundbreaking to certificate of occ. took about 9 months to complete.

I loved the process, but would probably not want to be a general contractor again! Be prepared to have lots of patience and spend a considerable amount of time inspecting work, plus making split second decisions you will live with for as long as you live there.
Sarah

 

[Marketneutral]

Housing bubble.

Be patient and you can buy a 1M dream house for 400K then do 200K in improvements and still be 400K ahead.

 

[Howard]

In some areas, Retirement Destinations will continue to appreciate, the Boomers are just starting to retire enmasse.

 

[capricious]

Am 46; wife is 39. Bought 7.5 acres on a 7800 acre lake
a year ago. In 15 years it MIGHT be a retirement place, or
maybe not. Depends on what else comes along. I consider
it my "fall back" place; if nothing else turns up, I will always
have it. Plus it has "day dream" value; keeps me sane (or
close to it.)