For many homeowners nearing or in retirement, the home has become their largest asset. And with home values in California continuing to rise, it’s natural to start thinking about how to put that equity to work — especially if you’re considering selling to fund retirement expenses.

But one often-overlooked piece of the puzzle is capital gains tax.

Let’s say you purchased your home for $200,000, invested another $100,000 in improvements, and today it’s worth $1.7 million. After selling costs and exclusions ($250,000 if single, $500,000 if married), you could still face a taxable gain between $780,000 and $1.03 million.

With combined federal and state tax rates ranging from 30% to 37%, that’s potentially hundreds of thousands in taxes — money that could otherwise support your retirement or be left to your heirs.

But here’s the key: If your home passes through your estate instead of being sold during your lifetime, your heirs may receive a step-up in basis. That means the home’s value is reset at the time of death, often resulting in little or no capital gains tax when the property is eventually sold.

So what do you do if you need access to your home’s equity now — but want to stay, avoid taxes, and leave something behind?

That’s where a reverse mortgage can be worth a second look.

If you’re 62 or better, and your home is safe and still fits your lifestyle, a reverse mortgage could allow you to tap into the equity without selling and without monthly mortgage payments. You retain ownership of your home and gain the financial flexibility to renovate, invest, or simply breathe a little easier.

It’s not the right fit for everyone — but when used thoughtfully, it can be a powerful strategy for retirees who want to stay in the place they love while protecting their long-term wealth.

If you’re curious about the numbers or want to compare your options, I’d be happy to help. No pressure – just real insight and experience. Call me at 925-807-1503 or schedule some time on my calendar here.