As a senior living alone, you have likely found that your home is just too big. Too large to care for and too vast to enjoy on your own. The house might be causing you more stress than relaxation. But when it comes to downsizing—something 42 percent of boomers want to do—there are three things you should consider for your home. Whether you are leaning toward keeping it in the family, renting, or selling, here is what to consider.
Keeping Your Home in the Family
If it doesn’t make financial or emotional sense to say goodbye to your home, think about keeping it in the family. While you can always include your property in a will, there are ways to pass the home on to your family in your lifetime, too.
Selling to Family
You can sell your home to your family. However, you need to be careful because you may incur hefty tax penalties if you don’t do it the right way. Ideally, you would sell the home to a family member at market value to protect both parties, tax-wise. You can even lend your child or another family member the money to pay for the home, but you must charge them interest to stay within tax guidelines.
Homes as Gifts
According to RBC Wealth Management, the ideal way to “gift” a home to your family is to use a revocable living trust. If you change your mind, you do have the option to alter the terms. This option can also involve a requirement that you pay your mortgage in full, however.
Using a trust—or bequeathing the home—is also an alternative. Once you pass away, the family can decide whether to sell the home or retain ownership of it. In some states, a transfer-on-death deed is a legal process to gift property to someone upon your death.
Selling on the Open Market
If you are hoping to downsize and your existing home doesn’t fit the bill, selling might be the best option. Many seniors opt to move to warmer climates upon retirement. Others choose a smaller home, whether closer to family or nearer to a favorite destination.
When contemplating selling your home, consider factors like improvements and professional advice. If your home requires repairs, for example, you may need to invest in those before you can successfully list and sell the property.
Hiring a professional can also put a dent in your profits. If professional staging or decorating advice is necessary, expect to pay at least $300 to begin the process. Depending on the size of the home, staging can cost $2,300 – $3,200 per month. And note that when you list a house with a real estate agency, your realtor stands to take home part of the profits of the sale.
Consider Average Home Costs in Your Area
Before making an irreversible decision on what to do with your home, look in your neighborhood for comparable properties. Looking at the average cost for similar homes in your area can tell you whether you can expect a good deal when selling your house. For example, over the last month, homes have been selling for an average of $405,000 in Huntingdon Valley.
If the market is not doing so well in your area, you may want to wait it out. In contrast, if prices are exceptionally high in your neighborhood, selling now may be the best plan.
Renting Your Home
Rental income can prove beneficial for many retirees. Regular monthly income—especially if you have paid off your mortgage—is welcome. But as a senior looking to enjoy life with fewer responsibilities, you may not be interested in being a landlord.
Of course, property management companies can handle those duties on your behalf. Property management rates average between five and ten percent of your monthly rental rate. Whether you decide to manage the property yourself or not, overseeing the details will be part of your routine.
Whatever steps you decide to take on selling or keeping your home, downsizing can offer you a new lease on life. Eliminating stuff—including your too-large property—can help you feel freer. Without the demands of housekeeping and repairs, you have more time to spend doing things you enjoy.
