Morris Law Center
3 Choices for Seniors Looking to Downsize Their Current Homes
Written by: Jim Vogel of ElderAction
One of the most pressing, and often emotional, decisions that seniors can face when looking to downsize to a smaller home is how to handle their current home. That home can be filled with so many memories and so many financial options, but it can also be filled with added burden for seniors looking to retire. So if you are thinking about downsizing your home during retirement, here are some ways you can deal with your old home:
Rent Out Your Home to Earn Some Extra Income
Are you planning on moving into an assisted living facility? If so, you should research local facilities and prices before you handle your current home. Many assisted living facilities provide the same services for seniors but come with different costs. It’s also helpful to keep in mind that assisted living communities are designed to provide independent living arrangements for seniors in apartment-style homes, alongside beneficial assistance with daily living tasks, such as bathing, cooking or taking medications. So if you don’t need help with your daily care or routine, then an alternate senior community may be a better fit for you and your retirement budget.
So what do all these choices have to do with your current home? Well, if you decide to move into an independent living community or an assisted living facility, you could always rent out your home to pay for the monthly costs and build more equity. If you play your real estate cards right, you could turn a nice profit by renting out your current home. Before you take this major step, though, you need to be aware of the potential costs of turning your home into a rental property. Aside from the costs to maintain your home, you may also be responsible for additional tax payments on that additional income, and you could end up spending a small fortune attracting potential occupants to your new rental property.
Sell Your Home to Gain Retirement Freedoms
If freedom is the focus of your downsizing move, you may want to just sell your current home outright. To avoid the headaches of having your home sit on the market for months, you should use a few real estate tricks to up the appeal to potential homebuyers and help it sell faster. Start by picking the right real estate pro to list your current home and take care of any needed repairs, so you don’t have any surprise expenses pop up on inspections. By selling your home before you downsize, you can possibly retire mortgage-free to save yourself some stress.
Keep Your Home in The Family to Preserve Memories
There are so many reasons to hold onto the family home, and there are several ways to pass your home onto your family members. If you want to relieve yourself of financial burden, you could always sell your home to loved ones, but treat this home sale like any other by using brokers, lawyers and assessors to ensure that everyone walks away feeling like they were treated fairly.
You could also gift your home to family members, but this comes with some special considerations, too, like tax burdens for those family members or even income implications for yourself. Consult with an Attorney and a CPA to obtain further information on this subject. According to Attorney Sarah Morris, “Depending on your needs, desires, and financial situation, a Trust may be the answer. Each client is unique, which makes a strategy session with an Attorney and a CPA critical.” So, keep these in mind before you decide to give your children the gift of your family home.
Lastly, you may be thinking of just holding onto your old home, in order to keep it in the family. Owning a second home can come with additional burdens and costs, though, so weigh all of your options carefully before you make your ultimate decision.
Deciding what to do with your current home can stir up some strong emotions. What’s most important, though, is keeping those personal feelings from hindering your ability to make a practical decision about your current home. Making the wrong choice could derail your downsizing plans, or at least make the process of moving to a new home more stressful.