FinancialAdaptation.org

Responsibly Preparing For Future Housing Funding

 

When homeowners eventually need to abandon their residences due to sea level rise (SLR), will they be financially ready?

 

One tool to start preparing U.S. taxpayers for property abandonment in the decades ahead may be an "SLR Relocation Account."

 

Here’s how such a program would work:

 

Modeled after the current Roth IRA savings program, which was established by the Taxpayer Relief Act of 1997, qualified homeowners who can no longer safely reside in their homes due to encroaching waters, would be allowed to annually save money to allow them to move to areas not threatened by rising ocean waters.

 

Such deposits into the relocation account would be tax-deductible if certain qualifications are met.

 

What criteria could apply?

 

The funds could only be used for new housing financing or rental options. Any other use would be restricted. Those utilizing SLR Savings Accounts would also have to keep their current mortgage or rental obligations current and avoid defaults.

 

Qualified individuals could include homeowners in areas identified annually by local governments as vulnerable to SLR.

 

Those using this forward-looking financial tool could only use the funds for their new primary residences. Any other use would be prohibited.

 

With savings accumulating over a period of 10 to 25 years or more, the increasingly expensive financial burden of securing a new place to live, whether by ownership or rent, would be eased in the future.

 

In those areas of the nation where sea level rise offers local relocation alternatives, individuals and families would be able to keep up their mortgage and rental payments, while at the same time saving critical funds for the future.

 

At the same time, in areas where local economies will survive rising seas, economic activity will be assured continuity, as the work force can remain geographically connected to existing and future jobs.

 

As with any proposal impacting federal taxation, this idea requires federal action. The time to start a detailed dialogue on saving for the future is now. New housing is always a crucial component of a viable U.S. economy. We need to protect economic interests today, while preparing for the financial realities of tomorrow.

 

Posted 5.11.14