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Downsizing can be beneficial to seniors for many reasons. According to a recent MarketWatch opinion, relocating into a smaller and more manageable home “could be the best move you make” during your golden years. You might buy (or rent) property closer to your loved ones. Alternatively, you might move into an assisted living facility or retirement community, where you’ll enjoy independent living without the upkeep.
But it’s not just about deciding where to live; you’ll also need to determine whether you’ll be selling your current home, renting it out, or leaving it with a family member. If you have decided to downsize but aren’t sure what to do with your current home, here are some ideas:
Where to Live?
Before determining what to do with your current home, you should prioritize deciding where you’d like to live. Self-sufficient and healthy seniors might look into a retirement community or assisted living facility.
Like retirement communities, assisted living facilities provide a safe, quiet atmosphere. They’re an option for seniors craving independence while still providing some assistance with daily tasks. For instance, seniors live in separate units, similar to studio or one-bedroom apartments.
Additionally, assisted living facilities help with medications, meal prep, and even activities like physical fitness, transportation, and socialization. For example, some communities offer on-site yoga, dance classes, and even beauty salons.
There are lots of communities out there. Tour multiple facilities to find the best home for you. In addition to finding out amenities and waitlist lengths, ask about pricing to determine affordability because the cost of assisted living can vary widely. For instance, A Place for Mom reports that assisted living in Boston ranges in price from $1,500 to $11,390 per month.
Once you’ve pinpointed where you’d like to spend your retirement years, it’s time to determine what you’ll do with your current home. One option is to rent your home while living elsewhere. Renting your home might not be the first option that comes to mind. However, it covers assisted living costs while still building equity.
Although renting your home can be profitable in the long term, it’s not for everyone. After all, you’ll still be responsible for upkeep and repairs if you have renters. Because managing two properties is a lot of work, Forbes recommends considering the following criteria before making your decision:
- Cash flow. Would monthly rental cover your mortgage, utilities, and other expenses? If not, consider selling.
- Profit. How much could you make if you sold the home today? If your return on investment is low, it pays to keep your house as a rental property.
- Taxes. U.S. tax laws don’t require capital gains taxes when selling your primary residence. (However, you will be taxed if you sell a rental home.)
Whether you lack time to maintain a rental property or stand to profit from a sale, selling your current home might be the best option. Home prices are still rising, albeit slower than previous years. However, according to financial expert Dave Ramsey, sellers can look forward to potential profits.
To get the most profit, seek a real estate agent specializing in senior sales. Talk to your agent’s broker to confirm they’re familiar with the Housing for Older Persons Act and they have the credentials you need.
Keep It in the Family
Instead of selling or renting your home, you might give the home to a loved one. That way, your home stays within the family while you keep building equity
Most sellers pay over 6 percent in realtor commissions, plus home improvement costs and taxes. By leaving your home to a trusted family member, you can avoid financial hassles.
The 65+ age group is growing faster than the rest of the population. Many seniors want to age in place. Downsizing into a smaller unit lets you relax and enjoy your retirement. By selling, renting, or keeping your current home in the family, you’ll be free to focus on your quality of life.