It is estimated that over 15% of the population in the U.S. are over 65 years of age. With one of the most common fears of seniors being their money will run out early, it is understandable that downsizing may be strategy to meet their goals.
Once the kids are grown, have careers, relationships and get a place of their own, parents find they may not need their “big” home like they did before. In other situations, their lifestyle might have changed, and the house just doesn’t “fit” anymore.
The benefits of a smaller home can include the following:
- Easier to maintain
- Lower utilities
- Lower property taxes
- Lower insurance
- More convenient location
- Single level
- Possibly more energy efficient
- Possibly lower maintenance
Like any other big change in life, it is recommended that a person should take their time to consider the possible alternatives and outcomes. Are they going to stay in the same area? What type of property would suit their needs for the future?
The tax-free exclusion allows a homeowner to take up to $250,000 of gain for single taxpayers and up to $500,000 for married taxpayers. Part or all of this could be used to generate income for retirement. Other uses for the equity could include paying off other debt, taking the trip of a lifetime or making a special gift.
There will be expenses involved in selling a home as well as the purchase of a new home. These will lower the amount of net proceeds you’ll have to invest in the new home.
Homeowners should consult their tax professionals to see how this applies to their situation. Please contact me at (206) 979-9632 or David@TheHarlanTeam.com if you have any questions about what your home is worth or how long it might take to sell it. Other things that could be of value are our Homeowners Tax Guide or Sellers Guide.