A free, lower risk way to lever up

[ochotona]

I just found out that Texas has a program whereby seniors 65+ can defer paying all property tax until their home is no longer their primary residence, and interest accrues at 5% annually... and no taxing authorities are allowed to foreclose on you during that time. Other States offer this too.

This seems like a much better way to lever up your portfolio than a margin loan, or a reverse mortgage (HECM), because there is no cost to participate, in the case of Texas you file one form, and there is no forced liquidation ever (but... don't do this if you have a mortgage. This could cause a foreclosure. I think it's only meant for people who own their homes outright).

If we get a real bear market in equities, and 10-year forward stock market returns come back to normal, 10% or greater (right now it's low single digits %), that could be a way to make money. Then you could pay your back taxes off and hopefully keep the difference.

But if you let this debt get too large, it will start to intrude into other areas of your budget.

You have to manage this so that when you do vacate the house, the sales proceeds won't be less than the tax liability, or else you will bring cash to closing... never a good thing when you are the seller.

[boglerdude]

Hadnt heard about this

https://www.sco.ca.gov/ardtax_prop_tax_ ... ement.html