Should You Sell Your House When You Retire
You may be nearing retirement or are already there, and you need to decide whether you want to sell your home or continue living in the same place. If you have already decided to sell your home, do you plan on renting or buying a new property?
Do I Need To Sell My House When It's Time For Me To Retire?
Selling your home if you have equity or a property that you own could be a way to fund your retirement. However, renting in retirement can be more costly than living in a home you own or paying property taxes and maintenance each year.
Retirement is a major life transition. Sometimes, one life change can lead to another. Is it a good idea to stay in your home after you retire? Is it time to leave? These are the reasons you should stay or move so that you can make an informed decision.
There Are Many Reasons To Keep Your Home After You Retire
People define empty nesters to be homeowners over 55 who have lived in their homes for ten years or more and have no children. Unfortunately, the number of empty-nest households is on the rise. Here are some reasons why people in this group decide to stay put.
Already feel connected to your community.
Sometimes it takes time for a community to feel like home. Nevertheless, it is possible to feel nostalgic about your neighborhood, especially if it was where you grew up.
Your home has been altered
You may be less likely to sell your home if you have already invested the money and time to make it comfortable. You can also modify your home as your needs change. Research shows that 19% of retirees have made some accessibility modifications to their homes, including modifying the flooring or adding handrails.
You wish to leave your home to a loved one.
You might consider leaving the family home to your grandchildren or children instead of selling it. Talk to a tax professional about capital gains tax implications for inheriting homes.
There Are Many Reasons To Sell Your Home After You Retire
Sources indicate that 25% of sellers are baby boomers, and 13% are from the silent age. These are the most common reasons people decide to sell their homes in retirement.
The home is too expensive.
It may be time to sell if you are unable to afford the monthly home costs and don't have a steady income.
Your lifestyle is not the home
You might want a smaller home or one with less maintenance as you get older. You might also have mobility issues that are easier to manage in single-story homes.
It is time to downsize
Many retirees choose to downsize from a large home with a single-family because it is more difficult to maintain.
You are looking for a new place
Sometimes, retired people want to move in order to pursue their hobbies like skiing or golf. You may also want to be near the beach or in a pedestrian-friendly area.
Retiree Tips For Selling A House
It can be difficult to transition from homeowner to renter, especially if your home has been there for a while. Make sure you can sell your home from both a practical and financial perspective before moving forward.
Calculate Your Equity
It is important to determine your potential profit before you sell your home. To find out how much your home can be sold, hire a real estate agent or do the comparables yourself. Remember to include any outstanding mortgage balance and to account for closing costs, commissions, repairs, and buyer concessions.
Timing The Market Correctly
The best day to list your house is the Saturday in May's first half. Research shows that homes listed within this window sell for $1,600 less and two weeks faster than the average.
Understand Listing Prep Work
There are likely to be cosmetic, structural, or mechanical upgrades that you need to make your home more appealing to potential buyers. Research shows that sellers who hire professionals for pre-sale preparation work average $6570. This includes painting, staging, and lawn care.
Capital Gains Taxes Are Worth Considering
If your home has been in your family for a while and you have accumulated significant equity over the years, you could be subject to capital gains taxes on the sale. The current tax law permits a single person to exempt $250,000 and a couple $500,000 from capital gains taxes. Talk to your tax professional if you think you might be able to pocket more than this amount. You can turn your home into a rental and then exchange it for another property through a 1031 exchange.
Is It A Good Idea To Rent In Retirement?
After you have decided to sell your home, you may wonder if it is worth renting or buying again. These are some of the main reasons that retirees choose to rent rather than own.
More Retirement Funds
You can sell your house and move to a rental to free up equity that you can use for monthly expenses during retirement. You can also reinvest your money in another investment type that will give you a high return and keep your money available if you have to.
Reduce Your Monthly Expenses By Downsizing
Many people realize that they no longer need the same amount of space or don't want to live in a large single-family home after retirement. A smaller home like an apartment can help you save money on your monthly housing, utilities, and furniture. You will also have fewer maintenance tasks and unexpected costs.
Less Expensive Insurance
Renters insurance is often less expensive than homeowners insurance. This is especially true if you live near the beach, where homeowners must have flood insurance.
There Are No Property Taxes
Renting can be a great way to avoid paying large taxes if you are moving to or living in an area that has high property taxes.
No Home Sale Contingency
You can sell your home and move into a rental property that matches your closing date.
Maintenance Is Less
You have to spend a lot of time being a homeowner, such as mowing the lawn and changing the HVAC filters. Your landlord will often take care of the majority of your maintenance tasks when you rent. Maintenance, repairs, and appliance replacements are not your responsibility.
Additional Amenities
You may find great amenities in your apartment if you are moving from a single-family house to an apartment.
Freedom To Travel
Renting an apartment means you don't have to live in your home for the long term. You can also rent an apartment for a short term so you can explore other cities or go on extended trips without worrying about whether your house is empty.
A Sense Of Belonging
Retirement communities and planned communities for seniors are great places to meet people at the same stage in life or with similar interests.
Renting After Retirement Is Not Easy
You can remember the lifestyle of a former homeowner and adapt to it if you are a long-term homeowner.
Letting Go Of Your Emotional Attachment
It can be hard to say goodbye to your "forever home." It will be difficult to say goodbye to your home, but you can keep the memories.
Relying On The Landlord
If you are not the property owner, you can no longer make the decisions. Your landlord will fix anything that breaks. It may not be possible to make the necessary upgrades. If you make any improvements, there will not be any return on your investment once you move out.
New Monthly Fees To Pay
It is possible that you will have to pay additional costs, such as pet fees or parking. These additional costs should be included in your monthly budget. Parking costs can reach $250 per month in large cities.
Rent Costs Are Unpredictable
Your rent, unlike a fixed-rate mortgage, can and will fluctuate annually, depending on the market and your landlord.
Renting is often cheaper than buying in many markets -- at least for the short term. According to U.S. News & World Report, Austin, Texas, was recently ranked among the top places to retire. The median rent price in Austin is $1,695 per month, while the listing price for a median home for sale is $389,000. Assuming a 20% downpayment ($77,800 upfront), closing costs, and a 4.3% rate of interest, the homeowner would pay $2,049 per month -- an increase in $354 over renting. Renters do not earn equity in their homes like homeowners, so buying is a better option in the long term.
