How Downsizing Seniors Can Decide the Future of Their Home

Dated: July 26 2021

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Image courtesy of Burst

 

How Downsizing Seniors Can Decide the Future of Their Home

 

Heading into a downsize is a big change with a lot of questions. Among the many decisions seniors face is what to do with their old home -- selling, renting, or giving it away. As you sort through your belongings, think about these key points we've sorted out for you.

 

Crunch the Numbers

 

As someone who is retired (or close to it), it's more important than ever to avoid stretching your income too tight. Chances are you're focused on what you'll save house-wise, like utilities, taxes, and upkeep. In the process of downsizing, you might also be able to slash any ongoing debts, so you have ample reason to make the most of this transition. 

 

As a starting point, run some calculations of your monthly expenditures and create a realistic budget for your purchase. When determining affordability, also take into account your income and down payment. Think about how much you might be able to get in the sale of your current home and consider all the moving costs. According to Consumer Affairs, an average move across town will cost between $600 and $1,000, but a long-distance move will run in the $2,000 and $8,000 range. So if you're going very far, that can really eat a chunk out of your funds. 

 

Don't forget; you'll have a decluttering phase as well. While decluttering can actually make you money if you sell off things, sometimes seniors struggle to decide the fate of items or need to hold them for family members to retrieve at a later time. 

 

Contemplate how you want your overall financial picture to look and what details you have no control over, and it'll help you see which of these options best fits:

 

Sell it!

 

If your home is paid for or has ample equity, you might make quite a financial coup by selling it. Keep in mind that you'll want to work with a skilled and trusted local Realtor like Karen M. Mitchell to help you get the most out of your sale. A real estate professional will know the local market and can help you make wise marketing decisions. They do charge a small commission, but Forbes points out these fees are more than worthwhile because of the expertise and assistance that comes with them. 

 

Rent it!

 

At first glance, this might sound like an ideal solution. You can put your home to work for you, putting a roof over someone's head and earning you money each month. 

 

Sometimes renting makes perfect sense. Maybe you're a handyman type, and you enjoy tackling home maintenance issues. Perhaps you plan to move right up the road, so coming by to check on things is easy. You can even turn to apps that provide assistance with property management.

 

However, that doesn't take into account the entire financial picture. Landlords have a number of hidden expenses, like utilities, insurance, repairs, and taxes. If you have gotten this far and are still thinking about it, do some calculations to see if it's really going to pay off or not. 

 

Another option for renting is to take the vacation rental route. While the pros and cons of renting still apply here, you can run your vacation rental more smoothly by advertising with a service like TurnKey. That way, you'll get essential services like house cleaning and 24/7 support, but your guests can also take advantage of highly sought-after features like complimentary Wi-Fi and digital locks.

 

Give it Away!

 

Gifting your home to someone you love has undisputable merit. Maybe the homestead has been in the family for generations, or maybe a close friend or family member is simply in need of a place to live. Unfortunately, it's not as simple as that. SFGate explains tax and legal considerations to take into account, like gift tax and capital gains tax. 

 

Also, note your home must be given or rented with its fair market value in mind, or the IRS could penalize you -- a $1 selling price or reduced monthly rent won't do. Since several personal details can influence this option, consider talking it over with an attorney.

 

Downsizing seniors have a lot to think about; start with your financial picture, and from there, you can formulate a realistic plan. After all, it's time to put yourself first, and you want to live comfortably in this next chapter of your life. 

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Karen M. Mitchell

When working with clients, Karen makes it a priority to get to know them and connect with them to fully understand what their dreams are when it comes to finding a home. Her warmth and loyalty with he....

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