Chip: ‘With the recent run-up in real estate prices, my Center City Philadelphia townhouse has appreciated significantly since I bought it in 1991. The house is in my name alone. Therefore, I can only exclude $250,000 of capital gains. According to a real estate agent friend of mine, the value of the house is now at that point. It seems like this tax law penalizes people who do not move. I realize that moving has its own costs, not to mention that I would probably buy a bigger house. So, once the tax exceeds the moving costs, should I move just to avoid the future tax? I know – we should all have such issues. I realize that I am fortunate. Although my home is my largest single asset and it has gone up in value, I don’t necessarily think of it as an investment.’

☞ Life is not a business, and one should not live it primarily to avoid paying taxes. I don’t think it’s a mistake to think of your house mainly as a home, not an investment. But financially, leaving aside any other considerations (like a sane, balanced life), it would be wise to move – and to the smallest, cheapest house you can find. Use the profit to buy a rental property or stocks or bonds. The less you spend on your own housing costs, the more you’ll have to invest.


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