Personal Finance Q & A
Selling Home Is A Tough Decision
Q My husband and I are 82, and the only income we have is Social Security and a small pension, which together amount to $20,183 annually. We also have invested in a $20,000 annuity, which gives us $83 monthly. We are considering selling our home, worth around $100,000, and moving into a rental retirement community. Annual expenses would be about $22,080. We must generate more income. We did not opt for mutual funds, because they included [undesirable] firms.
- Name withheld, Toms River, N.J..
A "One needs to know whether the annual $22,080 expenses on the retirement community rental include all your major living expenses," such as food and incidentals, says David Bendix, president of Bendix Financial Group, Uniondale, N.Y. If so, selling the house and investing the proceeds may make sense. If not, selling the home "becomes a tough call," he says. Owning your home can add financial security.
As for higher-earning investments, some mutual-fund companies make "socially responsible" investments that, for example, avoid tobacco or alcoholic-beverage stocks. Or you could consider some of the bond funds mentioned in the story on Page B7.
Q I am living on my husband's "widow's" pension. Years ago we invested in the Sentinel Funds. I receive quarterly dividend checks. This past year, the funds earned me about $30,000, but my income taxes went up. I want to cut down on my income tax. Sentinel has no tax-free investments. Shall I give my children $10,000 each? Or $10,000 to my church?
- H.P., South Carolina.
A Actually, Sentinel does have a tax-free account, the Sentinel Tax Free Income Fund, a municipal bond fund currently yielding about 4.84 percent. But if you elect to shift assets, you will owe taxes on any capital gains in the funds you sell.
Regarding gifts: Yes, the IRS allows you to give gifts of up to $10,000 annually to any persons you want, not just your relatives, without owing gift taxes. But you cannot take a tax deduction.
A gift to a church or other qualified nonprofit group is not limited to $10,000, and you can also take a tax deduction for the fair-market value of the gift at the date of the contribution, up to 30 percent of your adjusted gross income, according to accountant Edward Slott of Rockville Centre, N.Y.
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